Interactive Brokers review 2024

Pros: Where Interactive Brokers stands out

Trading commissions

Trading commissions are one of the biggest draws for customers, and Interactive Brokers definitely trumpets its pricing structure, which favors truly high-volume traders, but it operates a no-commission tier, too. The broker runs two service tiers: Pro and Lite, which are the paid and free levels, respectively.

Stocks and ETFs: On its Pro platform, Interactive Brokers’ headline rate for stock and exchange-traded funds (ETFs) trades is $1, but customers should note that’s a minimum commission and you could run up higher costs. That’s because the broker’s pricing is based on a per-share cost of a half-penny per share. If you trade more than 200 shares, you’ll start to move above that $1 headline rate. Still, a $1 trade can be a good deal if you’re getting a better overall price for your shares with Interactive Brokers’ execution. High-volume active traders will have to evaluate whether the broker’s execution is worth the extra cost. Plus, traders on the Pro platform can receive $0 commissions on more than 150 no-transaction-fee ETFs. 

If you’re running mammoth-sized trades (think 300,000 shares and up each month), then you’ll benefit from the broker’s tiered pricing, where commissions reach less than 10 percent of the half-penny rate. It’s another way that Interactive Brokers tries to attract active and professional traders.

But investors with a bit less coin can receive unlimited free stock and ETF trades if they’re part of the company’s Lite program. Plus, you’ll still enjoy many of the features of the flagship program.

No-transaction-fee mutual funds: Interactive Brokers bests all the top players in the number of no-transaction-fee mutual funds on offer. The broker offers more than 18,000 such mutual funds, both domestic and foreign, and these reduced fees are great for beginning investors. But while the broker may not charge a fee, that doesn’t mean the fund company won’t charge a sales commission (load) on the fund, so it’s important to watch closely so you don’t pay this often-avoidable fee.

Cryptocurrency: Interactive Brokers charges a commission of 0.12 to 0.18 percent, depending on monthly trade volume, with a $1.75 minimum commission, but no more than one percent of the trade’s value. It charges no spread markups, unlike other brokers who tout commission-free crypto trading but effectively charge higher buy prices and offer lower sale prices. So, for example, at Interactive Brokers a basic $1,000 trade in a month would cost $1.80 and you’ll avoid paying markup fees that are hidden in the trading prices.

Margin rates

Interactive Brokers’ reputation in low-cost margin loans precedes it. It’s one of the best features of the broker’s Pro program and really stands out from others, and it makes Interactive especially popular with advanced traders. For margin balances below $100,000, the broker charges just 1.5 percent above the benchmark rate, and the rates only go lower as you borrow more. In some cases, Interactive Brokers is charging less than half of what competitors are, so investors using margin often should absolutely examine this broker closely.

However, if you’re using the Lite program, you won’t enjoy rates that are quite so cheap. Here rates start at 2.5 percent above the benchmark rate. That’s still much better than comparable brokerages, however, and if you don’t use margin, then it’s not a deal-breaker anyway.

Such cheap margin may allow some clever investors to use their Interactive Brokers account as a way to fund larger purchases cheaply, but the margin rate is variable and if overall rates rise, so will the costs of your loan.

Trading platforms

Interactive Brokers upped its trading platforms recently, expanding them meaningfully. Trader Workstation remains the broker’s flagship desktop trading platform, and it’s among the best in the industry. Now available is GlobalTrader, a new mobile app that lets you access more than 90 global markets, and IMPACT, a mobile app that lets you make ESG investments more efficiently and sort those that align with your values. 

Back to the workhorse, though. Trader Workstation is not a platform for investors who have never used one before. It’s a complex, fully-featured program that feels like it does just about everything. You’ll get real-time monitoring, market data, customizable charts, streaming news and plenty more. The platform also includes tools for risk management, such as option analytics, so you can see how price changes affect options values. You’ll have access to more than 150 global markets all from your desktop, and you’ll be able to trade virtually anything.

If that’s too much, you can downshift to the basic client portal, a platform that will get the trading job done with its practical and no-frills interface. Or go mobile with its high-powered apps.

ESG investing

If you’re into socially responsible investing, then Interactive Brokers has what it says is a first for the industry: a detailed scoring system for ESG (environmental, social and governance) factors. The system scores companies along granular areas, such as reducing emissions or engaging with human rights or their workforce, and then totals a score for each ESG category and overall.

You’ll be able to quickly scan for companies that score highly and then compare them against one another with easy-to-use graphical representations. For those looking to evaluate their investments on these dimensions, this schema brings a usable way to put it into practice.

Looking to get started with ESG investing? The broker’s IMPACT mobile app allows you to look at your holdings from an ESG perspective and trade in or out, among other features. 

Variety of investing choices

If it trades on a public exchange, it feels like it’s available to trade on Interactive Brokers. Of course, the broker offers the usual candidates – stocks, bonds, ETFs, mutual funds and options – but it goes even further. Traders can also find futures and metals (gold and silver) here, and can trade stocks on foreign exchanges as well. You’re going to feel like you can trade it all at Interactive Brokers. 

In addition, working with Paxos Trust Company and Zero Hash, the broker offers cryptocurrency trading, not something you’ll find at every brokerage rival. You’ll be able to trade Bitcoin, Bitcoin Cash, Ethereum and Litecoin at an attractive commission and, again, without those hidden markups.

Besides these traditional choices, Interactive Brokers introduced in 2022 what it calls event trading, which is binary options betting on whether specific events occur in a set time frame. Essentially, you bet on how a futures contract on the Chicago Mercantile Exchange will perform by the end of the day on a “yes-no” question, such as “Will Security X close above $10?”. The broker charges a flat $0.10 per contract fee for event trading.

Account management interface

Dealing with all the stuff surrounding actual trading can be a pain if the account management portion of a broker’s site is poorly laid out. Who wants to go hunting for tax forms?

Interactive Brokers has cleaned up its account management site, which you have to log into separately from the main trading platform, though you can still trade here. It has a clean dashboard layout — with account balances, top positions, clearer menus, and one-click links to “high-frequency” parts of the site, such as downloadable activity reports, tax forms, funds transfer and the like. Plus, a trade button allows you to launch an order ticket quickly. 

It’s a welcome change from the prior layout and is much easier to use.

Research and education

Interactive Brokers has made great efforts to improve the education on its site. While the broker has been historically good about catering to advanced investors, it was less focused on beginners. Now, it’s shifted some of that emphasis and includes content that’s more relevant for a newer crowd, though overall it’s more focused on trading than long-term investing. In addition, the improved content organization has made the components much more accessible. 

Another notable improvement: the broker has made it clearer for readers how to navigate its educational content such as its Traders’ Academy, which offers tons of articles on investing, economics, using the broker’s tools and so much more. Courses are thematically divided, and you can also separate them out by skill level, with beginner, intermediate and advanced tiers. It also features a clear place to begin, making this some of the clearest broker content out there.

As before, active traders will likely find the offerings very useful, especially as they expand their circle of competence. The broker offers webinars as well as courses on specific markets and its own trading tools. It also offers fundamental analysis and market commentary from nearly 100 pros, including access to free research resources as well as paid research services, all of which may appeal to both new and advanced investors. Tack on a podcast, too. 

It’s worth reiterating: Interactive Brokers has made much progress in its educational offerings, meaning what was a slight negative in years past should now be seen as a solid positive.

Fractional dividend reinvestment

Interactive Brokers offers the ability to buy fractional shares and reinvest dividends into fractional shares as well. You can turn dividend reinvestment on or off at the portfolio level, meaning you’ll have all of your stocks reinvest their payouts or none of them.  

If there’s a downside here, it’s that you may be charged for the dividend reinvestment. If you’re working with the broker’s Pro tier, you’ll be charged the customary commission for any reinvestment, with a minimum of $1 per reinvestment – a setup that’s less advantageous than the free reinvestment offered at most other brokers. However, if you’re in the Lite tier, you’ll skip the commission, which is in line with the industry.   

That said, the Interactive Brokers fractional purchase program is more robust than rivals, allowing you to buy partial shares in a simply huge number of stocks and funds, including U.S., Canadian and European stocks and ETFs — more than 11,000 in total! Tops by our count.

Cons: Where Interactive Brokers could improve

Middle-of-the-road options pricing

Interactive Brokers just hits the industry standard options pricing of $0.65 per contract. Not bad, surely, but other brokers offer better non-discounted pricing with no or little volume (not counting the free apps). For example, Ally Invest charges just $0.50 per contract, while E-Trade charges $0.50 a contract if you make 30 trades per quarter, not exactly high volume. Rival tastytrade also offers highly competitive pricing on options trades, too, with non-discounted prices starting at an all-in cost of $0.50 and falling quickly from there.

Limited retirement account types

If you’re looking for a few of the more specialized retirement account types, Interactive Brokers may not be for you. Of course, the broker offers the big retirement account types – traditional IRA, Roth IRA, rollover IRA, SEP IRA and the SIMPLE IRA (which is organized through a business) – but it’s lacking the solo 401(k), which is arguably a better alternative to the SEP IRA. 

Interactive Brokers offers so many other account types, including the other key retirement accounts, that this missing type is not a dealbreaker for most people.