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Home » Banks, Roth IRA

My Battle with ETrade Over a $25 Fee on a No-Fee IRA

Last updated by on 10 Comments

ETrade Paper Statement Fee Strikes!

Back in 2005, I started a Roth IRA with ETrade because they offered a ‘no-fee IRA’ and they had a reputable name. They were my first online broker account. All stock market losses aside, everything had been running smoothly until I noticed something recently. I had a negative cash balance in my account (and I never trade on margin, or borrow from a broker). Of course, I decided to do a little digging.

What I found was that on my December, 2008 statement there was a $25 ‘Annual Custodial Fee’ charged to my account. Being that I signed up for a ‘no-fee IRA’ to avoid these kinds of nickel and dime charges, I was a little upset about this. So I called ETrade and went back and forth with an agent on the phone for about half an hour debating the merits of this $25 fee. His side of the tale, echoed on their website is that:
e-trade fees

There is no annual custodial fee for IRAs if you sign up for and maintain electronic delivery of statements and confirmations. If you choose paper delivery of these documents, you will be subject to a $25 annual custodial fee unless the total assets in your linked E*TRADE Bank and E*TRADE Securities brokerage accounts are $25,000 or more. Other fees may apply. May be subject to change.

Yes, I was receiving paper statements (but only for the last year or so). I had not received a ‘Custodial Fee‘ in each of the previous 3 years. All of a sudden in 2008, I started getting paper statements again. I really didn’t think anything of it and had forgotten the ‘must get electronic delivery’ catch. But why did I start getting paper statements again? I hadn’t re-opted to get them. I also didn’t receive any notification that I’d be getting them again either.

The agent on the phone couldn’t tell me when I opted to receive paper statements again. My thought is that E-Trade periodically updates their users electronic delivery settings – but this is speculative based on my experience.

Twenty minutes of being nice and debating the merits of the fee got me nowhere on the call, so I finally firmed up and said ‘the only way that I’m going to leave this call happy is if you refund the $25 fee, or you can shut down my account right now.”

He did. I’ll give them credit for that. Threatening to leave usually works.

Lessons Learned from the ETrade Custodial Fee Fiasco

  1. Check your cash balances in your accounts periodically to make sure that you are truly getting a ‘no-fee’ account.
  2. If you start receiving paper statements out of the blue, remedy it before you get charged.
  3. Read all the fine print when starting brokerage accounts. ‘No-fee’ is not always as certain as it sounds with all the little catches here and there.
  4. If you do get dinged with fees you didn’t expect, fight them. New customer acquisition is always going to be more expensive for brokerage firms than a frivolous custodial fee. They know that, and if they are smart they will choose not to lose you.

Online Broker Fee Discussion:

  • Have you had similar experiences being dinged on fees that you were not expecting? What did you do?
  • Do you have any positive ‘no fee’ really means no fee stories to share?

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About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 7,500+ others by getting FREE email updates. You'll also find every post by category & every post in order.


10 Comments »
  • allen says:

    in my limited experience it’s always “no fees…. other then these ones over here….”

  • Shaun says:

    Haha, at least your story has a happy ending. I switched local banks this last week because I wanted to cash a check and the tellers….refused. No joke. I had a lot of bills coming due over the weekend, and they refused to cash my check because they claimed they were about to close. I still had over 30+ minutes till they closed. It was just crazy.

  • stefy says:

    This is a nice post…thanks for the share…i will keep watching to your next post…this is very usefull thanks …

  • RateNerd says:

    I am glad that eTrade did the right thing and refunded the $25. It is amazing to me how many companies will lose valuable customers over small silly fees like this. But at the same time, what if you had not bothered to call?

  • Aaron says:

    I too had a few encounters with ETrade over fees that I wasn’t expecting. Mine was a bit more complicated, but ended up in a similar conversation.

    I had direct deposit setup with ETrade Bank and periodically logged in to check out the transactions. One login prompted me to fill in the Patriot Act-required personal information that is obtained from public records. That is, they ask you questions that only you can know that you didn’t provide the answers to. I answered these questions without a problem opening the account, but couldn’t get the right answers in this case. (I think the system was flawed because I know I answered the questions correctly: they asked me about my monthly mortgage payments, and I have never had a mortgage). My failure to answer correctly locked me out of the account.

    I called ETrade customer service and went through the process to unlock my account. After that, I was able to login without a problem. Unfortunately, it turns out they did fully unlock my account. My direct deposits started getting rejected from the bank.

    The surprise rejections caused three problems: an interruption in my cash flow, a change in my perceived behavior by ETrade, and the temporary loss of my earned money. I was depositing into a checking account that was no-fee as long as you maintained a certain amount of direct deposit every month. I met that criteria until the bank started rejected the payments. They hit me with a $15 fee. In addition, ETrade wouldn’t deposit my money into my account, or give it back to my company. It sat in ETrade limbo.

    This was bad, but the problems were not over. I called again to discuss the problem, and they told me that the account was finally unlocked. I also pressed on the fee and they refunded it, along with a bounced check charge that came about again because of their faulty freezing. After this, ETrade rejected another direct deposit, and charged me another $15 monthly fee because I wasn’t using direct deposit.

    I looked for a new bank after this. Many friends and co-workers recommended Charles Schwab Bank for their high quality customer service and features (investor checking, no ATM fees, 2% return on credit card). I was sold from my first phone call that was routed directly to an account specialist in Denver and then to a broker in Phoenix. I was used to ETrade service, where I sat on hold for up to 10 minutes before interacting with an individual overseas reading from a script. Four months in with Schwab and everything is going great. I highly recommend their services for younger folks for banking, and to get involved in investing. They’ll help set up a plan and can always answer question in person or over the phone. Later, if needed, they can step in for managed accounts and more.

  • steve says:

    I finally became fed up with eTrades fees so I just called to close my account. Guess what — it costs $10 to have them issue a check to close the account. Incredible!

    I’ve never had problems with Fidelity. My eTrade account (started with a different brokerage then purchased by eTrade) has been a nightmare. If you want to hold on to your money, whatever you do don’t invest it with eTrade.

  • Soullfire says:

    I’ve had many battles with Etrade over IRA. I got on on a special free IRA for life several years back. Now they are trying to get me to go paperless by charging my account that fee.

    The thing is, I like paper statements and they can’t charge me for paper because of the deal= so I have to call them every year to reverse the charge. They probably figure they will wear me out, but I’m not budging.

  • mary fehrnstrom says:

    You should try to deal with them on a loan modification….what a joke. Stay away at all costs if you can! They don’t seem to mind throwing a family out of their home.

  • William Greenberg says:

    If “throwing a family out of their home” means foreclosing on a default mortgage, then they are doing exactly what a bank is supposed to do. It is very sad when a family loses a home, but hardly the fault of the bank when it is protecting its assets.

  • Britt (Your Roth IRA) says:

    I’m not sure how much longer eTrade can continue to compete. When they debuted, they seemed to be going after the niche now filled by TradeKing, Zecco, Firstrade, and other true low research service, low cost brokers. But it seems like they’re trying to meet the needs of customers who want a “full-service” broker as well, to the detriment of their original business model. A $25 maintenance fee pretty much defeats the whole idea and purpose of an online, low-cost brokerage!

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