How Competitive are Interactive Brokers Commissions Pricing? And Also the Monthly Activity Fee | Investment Moats Skip to Content

How Competitive are Interactive Brokers Commissions Pricing? And Also the Monthly Activity Fee

I got to apologize that I may not have communicated something very well. I have shown everyone how to apply and set up their interactive brokers to trade.

However, I have failed to explain clearly that there is a monthly activity fee charged. This activity fee goes away if your account balance is greater than US$100,000.

It is not that I wish to hide this from readers but that there are many things to explain about. I felt it is better to explain the cost aspect today.

This post explores how competitive Interactive Brokers is when it comes to commissions for trading stocks.

Specifically, my focus will be on the trading cost if you wish to do-it-yourself to create a low-cost, passive portfolio with exchange traded funds.

If you are less interested in exploring Interactive Brokers as a platform for that, but to trade or invest in a portfolio of individual stocks, I am sure there are some useful takeaways as well.

This post will not explore the trading cost for options, futures, forex, spot currencies, fixed income, fixed income (which should be just as competitive)

A Monthly Activity Fee if Account Value is Less than US$100,000

Different brokers have different fee structures.

For traditional brokers, they levied dividend handling fees and custodian fees if you trade oversea stocks through them. Their commission and forex conversion costs could be much higher.

Interactive Brokers do not have dividend handling fees or custodian fees (however, like all brokerages, for atypical requests, they do levy fees).

Their currency conversion costs are among the lowest, if not the lowest.

They do not have an account minimum as well.

However, if you start with a small capital balance (in IB language that will be Net Liquidation Value) that is less than US$100,000, there will be a monthly activity fee levied.

You can go to this page to find out more information.

Let us go through some permutations.

If your net liquidation value is more than USD $100,000, no monthly activity is levied. For the first three full calendar months, the monthly activity fee is also waived.

If your total monthly commission for the month is US$7, then your monthly activity fee is US$10 – US$7 = US$3.

This means that IB does not double charge you. If you trade more, there will be no activity fee.

If your total monthly commission is more than US$10, there will be no activity fee.

If the capital in your account is less than US$2000 the monthly activity fee is US$20 fewer commissions paid.

If you are less than 25 years old, the monthly activity fee is US$3 less commissions paid.

This maintenance fee, is less of a problem for traders with account value less than US$100,000 because their commissions would likely aggregate close to US$10.

However, if your investment strategy requires you to watch your costs, then this activity fee may be a problem.

With that, let’s discuss how competitive is Interactive Brokers’ commission pricing.

Understand the Cost Stack

If you would like to compare the cost between different brokers, it can be very daunting because you do not know about what are the costs to consider.

The cost stack from my Dimensional Fund Advisers article

Just like in my comprehensive guide to investing in Dimensional Fund Advisors, you should look at what you need to pay as a “cost stack”. This is a set of costs that you would have to pay.

In general the cost stack would look like this:

  1. Broker commission. What your broker charge you to make the transaction
  2. Exchange and Clearing fees. The exchange where the shares are listed would typically charge a clearing fee. Some exchanges such as Hong Kong will have stamp duty fees. Some exchanges will have exchange fees.
  3. Forex conversion cost. if you are purchasing shares in a currency different from your home currency, someone would have to help you convert the money in your home currency to that of the foreign currency. This can be done by your bank, a third party agent like Transferwise, or your broker

This do not include a few other costs that you should think about if you are a fund investors such as bid/ask spread, tracking error, dividend withholding charges.

This article is meant to be more general, so let us keep to those three category of fees.

Interactive Brokers is Cheaper If Your Trading Size is Larger.

I find that trying to identify the broker that can give you the cheapest cost is very difficult because every one of us is different:

  1. Some of us trade exclusive on Singapore market, some are trying to get exposure to Netherlands. Some brokers have access to some exchanges some do not
  2. Due to our circumstances, our trade size is also different. Different brokers are competitive on different levels
  3. Our frequency of trading can be different as well

To know whether Interactive Brokers is right for you, think about your needs by considering the following:

  1. How much in a year you would like to invest?
  2. What is the frequency of your trade? Are you a trader that likely make 5 to 15 trades a month?
  3. Which exchange do you wish to trade on and which broker gives you access to it at a better rate

For those of us who would like to form a passive, low-cost portfolio with exchange-traded funds, cflee from HardwarezZone’s ShinyThings Club thread created this awesome Google Spreadsheet that helps you figure out going to which broker is cheaper if you would like to form a three-fund portfolio.

cflee understands that if your total capital balance in Interactive Brokers is less than US$100,000, there is a US$10 monthly activity fee.

So your mileage may vary and that other brokers such as Standard Chartered Online Trading, which enables you access to vibrant ETF markets like London Stock Exchange my be more competitive.

What you can do is go to File > Make a copy in Google Sheets and you can put in your frequency of trade and monthly investment and see what works for you.

I went through some of the numbers and though I share it with you.

The context of this discussion is that you are willing to invest $X a year into some exchange-traded funds, at different frequencies. You are likely not going to be a frequent trader (if you are you may gain some insights from this data as well)

Total Cost Comparison Between Interactive Brokers and Standard Chartered Online Trading

Why did cflee use Standard Chartered Online Trading (SCB) out of all the brokers?

The reason he chose that is because, other than DBS Vickers and Saxo, SCB is the only one that gives you access to the UCITS ETFs listed on the London Stock Exchange.

There are other brokers now that are cheaper than SCB. Two that you can consider is FSMOne and the new Tiger Broker (which ironically Interactive Brokers have a stake in it)

SCB’s overseas commission rate is 0.25% with a minimum commission of $10.70 with GST. With FSMOne and Tiger Brokers, they can reach 0.08% with a minimum commission of roughly SG$10.

So clearly FSMOne and Tiger Broker can be as competitive as Interactive Brokers. The issue is that both Tiger Brokers and FSMOne currently do not allow you to trade on the London Stock Exchange (where the UCTIS ETF is listed) but if you wish to have low-cost general trading options, those two platforms are worth considering.

cflee’s comparison between IBKR tiered and SCB

cflee factored in a lot of costs so that you can compare the total annual cost between different options. He even goes as far as computing the opportunity cost of sitting on cash an only invest once a year or twice a year. I think that is certainly valid but I would take that out of comparison because I am not sure in reality whether the effect is big or small.

I decided to put in some capital balance at a different frequency to evaluate the difference in cost:

Interactive Broker annual investment cost for Tiered and Fixed commission structure versus SCB

You may have a fixed amount that you wish to invest that range from $6,000 a year to $100,000 a year. You may invest once a year, half yearly or quarterly.

You may have enough to consolidate $100,000 in Interactive Brokers account so that you can bypass the $10 monthly activity fee or you may not.

So in the table above, you can appreciate the annual cost of investing that said amount.

There are two sets of commission structure for Interactive Brokers:

  1. Tiered – The commission charged depends on your trade size. If the size is smaller the commission is lower and as it goes up the commission is higher. Clearing and Exchange fees are seperated from the commission. For some who starts off smaller, this one would be more ideal.
  2. Fixed – Interactive brokers charged a fixed commission. This commission factors in clearing and exchange fees.

We will discuss on fixed and tiered later. For most of us, tiered commission structure is cheaper.

That said many of us may not have factored in all the fees. Thus, cflee’s spreadsheet did this for us and you will realize actually the difference in a lot of case is not too much (compare the IB Tiered vs IB Fixed).

Interactive Broker annual investment cost for Tiered and Fixed commission structure versus SCB

To allow you to compare against other prospective brokers, I have compiled the annual investment cost as a percentage of the annual amount to invest.

In this way, I think it is clearer.

Some observations:

  1. If your capital balances are less than US$100,000, brokers such as SCB and possibly FSMOne, tiger brokers are cheaper.
    1. The cut off is about $2000 a month or $24,000 a year
  2. If you reduce the execution frequency your total annual investment cost goes down. But there is a question of whether you missed out on returns and there is an opportunity cost. Kyith’s opinion: In theory yes, but also in theory the difference may be small.
  3. In some cases, the tiered is cheaper and in some cases, the fixed cost is cheaper.
  4. Generally, the cost difference in the grand scheme of things is very small.

With this annual investment cost, you can compare against other brokers.

But do note, if you wish to compare well, remember to do what he does:

  1. factor in cost of currency conversion
  2. exchange and clearing fees

Interactive Brokers have a currency advantage in that the conversion cost is about S$2.80 flat plus a rate of 0.2 basis points (this reads 0.00002% vs the 0.30% of SCB and 0.50% of some traditional brokers)

So do bake in the costs and see which one is better.

Consider Your Willingness to Commit to the Interactive Brokers Platform

What may be holding some of you back is the US$10 monthly activity fee if your capital balance is less than US$100,000.

Some of your reasons for being apprehensive about this fee may be valid but in other cases it may not be.

I think your main decision point is whether you see the appeal of IB as a platform to consolidate a lot of your stock holdings.

If you are willing to at least try and build your wealth up and consolidate, and feel that Interactive Brokers is a platform you are willing to invest in, then consider starting with them.

However, if you are unwilling to commit, and prefer other platforms without this hurdle, then you might wish to evaluate other options.

Somewhat, I feel that there should be other factors then just very low cost.

I used to buy into the idea that if you are willing to commit, even if you do not have US$100,000 start with the platform first.

The data tells me maybe you should spend some time building up capital.

Evaluating the cost over time.

I tried to model how cost goes down as you commit longer to the IB platform.

  1. I have S$24,000 a year to invest
  2. IB Fixed Tier commission rate
  3. Invest in a LSE ETF

It would take roughly 5 years to hit US$100,000 in capital balances. Before that your total commission fee for the year is $120 a year (this is less accurate versus cflee’s calculator. His figure will work out to be $166 a year.)

If you look at column 12, the IBKR expense, which is made up of commission and activity fee, starts at 0.69% but gradually goes down to a very manageable level.

But if we look at column 11, where I compute the total cumulative fees paid up to that year divided by the total cumulative money I put in, the cost does go down.

However, after 20 years, the cost basis is still 0.25%. For some of you, if your total cost paid is still 0.25%, you may be disappointed.

My push back to that is…. for many of us older birds, our average cost of trading have been higher than 0.25% for a long time, and we survive on that.

If you cannot live with this activity fee, then use another platform and select Interactive Brokers when your potential capital balance is higher.

Here are some other considerations:

  1. Commission cost is a one time cost unlike a AUM fee
  2. Your existing commission structure may be as high as 0.69%, if you factor in the currency conversion. At my traditional broker, the currency conversion could be as high as 0.50%. So the hurdle to move over may not be that big

Interactive Brokers Tiered Commission Structure

In the tier commission structure, you are charged based on your trade size. Different markets have different tiers.

You can review the commission pricing here. You can also find the exchange and clearing fees there.

Let me highlight some common ones:

Most of us should trade with a volume of less than 300k shares. The minimum commission is US$0.35 which is very cheap.

The report above shows the tiered comission. The report typically seprates exchange and clearing fees from comissions. In this case, there isn’t any fees.

US$0.35 is less than the US$1 fixed commission if you choose the tiered pricing.

Based on my trade size the commission rate is 0.01%. If you include a $2 currency conversion charge, this becomes 0.07%.

If you invest in low-cost UCITS ETF listed in the London Stock Exchange, and they are denominated in USD, then your cost would be between US$1.70 to US$39.0. The fee works out to be 0.05%.

In the above transation, the tiered commission works out to be US$4.63. This is lower than the US$5.00 fixed commission but barely.

This works out to be 0.055%. If you include a $2 currency conversion, this becomes 0.08%.

Here is the Australian tiered fees.

Finally here is the tiered fee structure if you trade the Hong Kong markets. In general the fee is 0.08%.

In general, my commission will hit 0.09%. However, with the exchange fees (under the fee), my average cost comes up to 0.19%.

I realize we cannot reduce this.

The bulk of the cost is a 0.10% stamp duty.

However, if we are purchasing ETF listed on the Hong Kong stock exchange, the 0.10% stamp duty goes away. This becomes much cheaper.

Interactive Brokers Fixed Commission Structure

Here are the various commission pricing under the fixed commission structure:

I find that if your account balance is more than US$100,000 and your trade size is more than $1000, the difference between Tiered and Fixed is not a lot.

How to Switch from Fixed Pricing Structure to Tiered Pricing Structure

You are not tied to one standard commission structure. You can switch between the two when your needs change.

The change should take 1 day.

Login to your Interactive Brokers on your Desktop.

Go to Account Settings > IBKR Pricing Plan.

The interface is a bit of a problem. It does not tell you this is where you change the pricing structure.

It just reads IBKR Pro!

If you manage to get in, then you can change accordingly.


In general, I feel that if we considered all the forex, exchange, and clearing, broker commission fees, Interactive Brokers is very compelling.

The cost should be an important part of the consideration but other aspects matter as well. You would want a platform that you know has been around for a long time, more consistent than not, have a breath of markets to trade, and a breath of products available to you.

Interactive brokers is very cost competitive to trade other financial instruments as well (that I have failed to explain here)

At the end of the day, don’t spend all the time saving on commission, focusing on the trees and not see the forest.

Eventually, your asset allocation, stock selection, and execution may outweigh the importance of cost.

Try your best to get an acceptable overall cost, then focus on investing.

My Comprehensive Interactive Brokers How-to Funpack

Here are some of my past articles on wealth building with Interactive Brokers. I hope it makes your life easier and brighter.

  1. An Easy Step-By-Step Guide to Setup Interactive Brokers (IBKR)
  2. How to Fund & Withdraw Funds from Your Interactive Brokers Account
  3. How to Convert Currencies in Interactive Brokers
  4. How to Buy and Sell Stocks and Securities on Interactive Brokers
  5. How Competitive are Interactive Brokers Commissions Pricing? And Also Explaining the US$10 Monthly Activity Fee
  6. How to Transfer your shares from Standard Chartered Online Trading to Interactive Brokers
  7. Send Money from TransferWise to Interactive Brokers

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Here are the easy steps that allow you to qualify in a short time.

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