Is eToro free?
eToro is in fact a zero-commission broker when it comes to buying and selling US stocks. Zero commission is especially useful if you trade relatively low volumes, like buying stocks for less than $500 per trade, because you won't be hit with any minimum fees the broker might charge.
We should note that the payment-for-order-flow model, which is used by some zero-commission brokers to generate income (rather than relying on commissions), could potentially create a conflict of interest between you and your broker. This could result in trade execution (like routing your orders to specific market makers) that might be unfavorable for you under certain market conditions, especially when using market orders (as opposed to limit orders, which seem to be less affected).
Keep in mind that at some brokers, you could incur non-trading charges like withdrawal or inactivity fees. If you want to trade options, bonds or futures, then a transaction fee may also apply. Also, if you trade on margin, the margin rate charged by brokers can differ wildly. In the next chapter, we'll find out what these charges are at eToro and how they compare with fees charged by its closest competitors.
Overview of eToro fees and charges
It's safe to say that eToro's fees are low in general. They either don't charge a brokerage fee for things that other brokers do, or they only charge a small amount.
Here's a high-level overview of eToro's fees
|Assets||Fee level||Fee terms|
|US stock fee||Low||Free stock and ETF trading|
|EURUSD fee||Low||The fees are built into the spread, 1 pip is the average spread cost during peak trading hours.|
|US mutual fund fees||-||Not available|
|Inactivity fee||Low||$10 per month after one year inactivity|
eToro fees explained
Online brokerages in general charge much lower brokerage fees than traditional brokerages do - this is largely because online brokerages' businesses can be much better scaled: from a purely technical standpoint, it doesn't make that much of a difference for them if they have 100 or 5,000 clients.
This is not to say, however, that they don't charge any fees at all. They make money by charging you various rates for various actions or events. Usually you need to keep an eye on the following three types of fees:
- Trading fees - these are brokerage fees that you pay when you actually carry out a trade, like buying an Apple share or an ETF. What you pay is either a commission, a spread or a financing rate. Some brokers apply all of these.
- A commission is either fixed or based on the traded volume.
- A spread is the difference between the buy price and the sell price.
- A financing rate or overnight rate is charged when you hold your leveraged positions for more than one day.
- Non-trading fees. These are usually related to some operations you carry out in your account, such as depositing money, withdrawing money, or not trading for an extended period.
We compare eToro fees with its closest competitors, XTB and Trading 212.
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eToro trading fees
eToro's trading fees are low, which makes it suitable for you even if you trade often (i.e. several times a week).
Let's break down trading fees according to the different asset classes available at eToro.
eToro's trading fees are low.
Stock fees and ETF fees
eToro has low stock trading fees.
eToro's forex fees are low.
|EURUSD benchmark fee||$8.7||$8.5||$26.4|
|EURGBP benchmark fee||$12.9||$8.3||$25.0|
eToro has low CFD trading fees.
eToro non-trading fees
When it comes to non-trading fees, eToro is a rather expensive broker. This means that it tends to charge you a lot for non-trading-related activities.
Non-trading fees include various brokerage fees and charges at eToro that are not related to buying or selling assets. This can be a withdrawal fee, deposit fee, inactivity fee or account fee.
eToro deposit fee
Usually, brokers don't charge anything for deposits, and eToro is no different.
eToro withdrawal fee
Unfortunately, eToro does charge a withdrawal fee of $5 for bank transfers. This means that you need to pay this amount when you transfer money from your brokerage account back to your bank account. Sometimes this is a flat fee, but a percentage charge may be applied in some cases. It's up to you to decide whether you can tolerate this, keeping in mind that flat fees can hurt more if you withdraw small amounts only.
|Withdrawal fee for bank transfer||$5||$0||$0|
eToro inactivity fee
eToro does apply an inactivity fee and it is $10 per month after one year inactivity. Keep this in mind to avoid getting charged after a longer idle period. The fact that eToro charges an inactivity fee makes it less ideal for you if you are a buy-and-hold investor.
The inactivity fee charged by eToro is low.
|Inactivity fee||$10 per month after one year inactivity||€10 per month after 1 year of trading inactivity and if no deposit was made in the last 90 days||No inactivity fee|