A Comprehensive Guide to Understanding Promotional Offers from Online Brokers

If you want to up your financial game, you might be thinking of having your money work for you in a trading or investment portfolio. However, choosing the perfect brokerage account might not be easy because the quality of service differs along a spectrum with different brokers. Interestingly, many brokers offer different kinds of promotional offers to get you sign up for a trading/investment account with them.
Irrespective of whether you are a new or experienced trader, you should seriously consider the promotions being offered by the broker when you want to open a new brokerage account. Many people erroneously assume that promotional offers from a broker could be a warning flag about the quality of service that you can expect. Skeptics often tout that “if it’s too good to be true” adage to suggest that promotional offers mean that an online brokerage might offer subpar service down the road.

Nonetheless, promotional offer have always been a regular occurrence in the financial industry. Gone were the days when banks often lure and incentivize customers with sliced bread and toasters. These days, brokers offer sign up bonuses that can reduce some of your early trading costs. A sign up bonus can go a long way in boosting trading returns for traders who trying to stretch the dollar to make ends meet.
Questrade has a special promotional offer giving you $50 in free trades if you apply a Questrade promo code during signup. In addition to signup bonuses, brokers can also offer referral bonuses, commission bonuses, trade bonuses, and IRA dividend bonus among others.
A few points to watch on promotional offers
Terms and conditions apply
When you see a promotional offer from an online brokerage firm, you should take if for a given that terms and conditions will apply. The terms and conditions to promotional offers are usually in the fine print. The promotional offer might be restricted to certain locations or account types; hence, you need to ensure that you are eligible.
Always do the math
Some promotional offers will require you to make some commitments before they can be redeemed. For instance, a promotional offer might require placing a certain number of trades or maintaining a minimum trading balance for a set duration. You’ll need to ensure that the requirements for redeeming the promotion offer do not outweigh the real value of the offer.
Pay attention to your taxes
Some promotional offers could be taxable in certain jurisdictions; hence, you’ll need to ensure that you know the implication of such offers on your taxes. For instance, the IRS will require a report of promotional offers valued at at least $600.
Make sure you are comfortable with the broker
Many people often make emotional (read greedy) decisions to sign up for a trading account because the broker gave out some irresistible promotional offers. However, you need to conduct your due diligence to be sure that you’ll be comfortable conducting your trading and investment activities before you sign up. Don’t even think about signing up just to get the promotional offer in the hopes of jumping ship after you take advantage of the offer – such an action is more trouble that it is worth.

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