Best brokers for bonds in November 2024
Bond investors deploying new money have enjoyed rising interest rates in recent years. Bonds are offering higher yields than they have in years, making the bond market more attractive. So investors are on the hunt for the best broker for bonds, and some new upstart brokers even allow you to invest in partial bonds, letting you get in with virtually any amount of money.
Bonds are not as popular as stocks among individual investors because their potential return is lower overall. A bond promises you a specific payout over its lifetime and tends to be less volatile than a stock, and both qualities make it a more appealing option for retirement portfolios. While the best brokers for stock trading have slashed their commissions to zero for stocks, trading bonds may still cost you a commission, albeit a small one.
Bonds have also been less popular with newer investors because of the higher minimum to invest. Generally, bonds are sold with a face value of around $1,000, and most brokers let you purchase only whole bonds, not partial bonds. Because you’ll need to come up with $1,000 for each bond you want to buy, it takes a larger amount to build out a diversified bond portfolio. However, a handful of brokers are changing the rules here and may let you buy partial bonds.
Bankrate analyzed a range of firms to find the best online brokers for bonds. Here are our top picks.
The best online brokers for bonds:
- Charles Schwab
- Fidelity Investments
- Public
- Interactive Brokers
- Merrill Edge
- Webull
- J.P. Morgan Self-Directed Investing
Top online brokers for bonds
Charles Schwab
Charles Schwab can be an attractive place to trade bonds because of its low commissions. The broker charges no commission on U.S. Treasurys, either in auctions or on the secondary market. Commissions on other types of bonds, including corporate bonds and municipal bonds, run just $1 per bond, though Schwab does have a $10 minimum here. Schwab also offers access to other types of bonds, such as mortgage-backed securities and foreign bonds, where pricing differs. Add on the variety of other tradable securities — stocks, ETFs, mutual funds, options and more — and Schwab is one of the best places to build an investment portfolio.
Cost per trade: $0 on U.S. Treasurys, $1 on corporate and municipal bonds ($10 minimum)
Fractional bonds: No
Fidelity Investments
Fidelity is also a great place to purchase U.S. Treasurys, allowing investors to buy them through auctions or on the secondary market for no commission. Other dollar-denominated bonds such as corporate and municipal bonds are priced at $1 per bond with no stated minimum amount. Foreign-denominated bonds are charged other fees and minimums, however. With Fidelity you may be able to purchase new bond issues at no commission from time to time. Fidelity offers a variety of other tradable securities and regularly scores well for its customer support.
Cost per trade: $0 on U.S. Treasurys, $1 on other major dollar-denominated bonds
Fractional bonds: No
Public
Public is a more recent entrant to bond trading but one that newer investors might appreciate because it allows the purchase of fractional bonds. Investors can buy corporate bonds or Treasury bonds with as little as $100. The broker charges $0.10 to $0.25 for every $100 face value in Treasurys and $0.35 to $0.50 for every $100 in face value of corporate bonds. Clients can also open a bond account that promises an attractive yield with a $1,000 minimum investment. Public provides commission-free trading on stocks, ETFs and options as well.
Cost per trade: $0.10 to $0.25 for every $100 face value in Treasurys and $0.35 to $0.50 for corporate bonds
Fractional bonds: Yes
Interactive Brokers
Interactive Brokers offers tiered commissions that could reduce your costs if you’re buying more significant volume on corporate bonds, municipal bonds or Treasurys. For example, Treasurys cost 0.002 percent of the face value up to $1 million and half that rate above $1 million, with a $5 minimum at each level. Corporates cost 0.1 percent of face value for the first $10,000, with a $1 minimum, and amounts above $10,000 are charged at just one-quarter the base rate. Interactive Brokers also offers investors access to markets around the world and among the broadest range of tradable securities, including cryptocurrencies, in cooperation with a business partner.
Cost per trade: Treasurys: 0.002 percent of face value for first $1 million ($5 minimum); corporate bonds: 0.1 percent of face value for first $10,000 ($1 minimum)
Fractional bonds: No
Merrill Edge
Merrill Edge offers trading in Treasurys, corporate bonds, muni bonds and government agency bonds. Investors can buy Treasurys either at auction or in the secondary market for no commission. Corporates, munis and agency bonds are priced at $1 per bond, with a $10 minimum and a $250 maximum. Merrill also offers stocks and ETFs for no commission, and its affiliation with Bank of America makes it an attractive place to consolidate your financial assets.
Cost per trade: $0 on U.S. Treasurys, $1 on corporate, municipal and agency bonds ($10 minimum)
Fractional bonds: No
Webull
Webull is a slick financial app that allows you to trade a variety of securities, including stocks, ETFs and bonds. For now the app offers trading in only Treasurys but plans to roll out access to corporates and municipal bonds in the near term. Pricing is based on the bond’s maturity, with terms of less than one year charged 0.07 percent, those from one to three years charged 0.4 percent, and those longer than three years charged 0.7 percent. In other words, a $1,000 bond would cost $0.70, $4, or $7, respectively, at each term. Webull is rolling out fractional bonds in the short term, so investors may soon be able to put smaller amounts to work.
Cost per trade: Treasurys charged at a tiered rate of 0.07 percent, 0.4 percent or 0.7 percent
Fractional bonds: No, not yet
J.P. Morgan Self-Directed Investing
J.P. Morgan Self-Directed Investing offers trading on Treasurys in the secondary market as well as corporate bonds, munis and agency bonds in the secondary market. Treasurys are traded commission-free. Corporates, munis and agencies are charged $10 per trade for the first 10 bonds, with a fee of $1 per bond above that level. That pricing is in line with other brokers. J.P. Morgan also offers commission-free trading on stocks and ETFs, and the broker’s affiliation with Chase Bank makes it easy and convenient to transfer money between the two.
Cost per trade: $0 on U.S. Treasurys, $1 on corporate, municipal and agency bonds ($10 minimum)
Fractional bonds: No
