How Much Does Freetrade Charge?

Imagine logging into your Freetrade account, ready to invest in the next big stock. You’ve read countless articles about commission-free trading, but as you click to confirm your trade, you wonder: What are the hidden costs?

Here’s the reality—Freetrade, like any other trading platform, may lure you in with zero-commission trades, but there’s a lot more behind the curtain. This article dives deep into the real cost structure behind Freetrade, breaking down everything from fees to account types, so you’re never left wondering what’s going on with your money.

The “Free” Part of Freetrade

Let’s address the most obvious part first. Freetrade doesn’t charge for buying or selling stocks on the platform. Unlike traditional brokers who charge a fixed commission for every trade, Freetrade advertises commission-free trades. This is great for the average retail investor, but it also raises a question—How does Freetrade make money? After all, no platform can survive without a revenue stream.

Freetrade earns through other channels, primarily through premium features and services. Free trades are the hook—once you’re in, they offer a host of upgrades that add value but come at a price.

Freetrade Plus Account

While the basic Freetrade account offers commission-free trades, Freetrade Plus comes with more features for £9.99 a month. With a Plus account, you get access to additional stocks and ETFs that aren’t available to basic users. You also get limit orders and stop losses, crucial tools for managing risk in the volatile stock market. But is it worth the extra cost? For active traders or those who need more sophisticated tools, the answer is often yes.

One sneaky charge is for the stocks and ETFs available only to Plus members. If you’re using a free account, you might find that some stocks you want are only available to premium users. This can push you into upgrading, especially if you’re eyeing a specific investment that’s behind the paywall.

Foreign Exchange Fees

Here’s where things get a little tricky. If you’re investing in international stocks, Freetrade charges a 0.45% foreign exchange fee when converting your pounds to another currency. This might not seem like much, but it can add up over time, especially for frequent traders or large investments. For example, if you invest £10,000 in a U.S. stock, you’ll pay £45 just to convert your currency.

This fee is competitive compared to traditional brokers, but it’s still a cost you need to factor into your trading strategy. It’s not exactly free, is it?

ISA Fees

If you want to open a Stocks and Shares ISA with Freetrade, you’ll need to pay a monthly fee of £3. The ISA account is a great tax-efficient way to invest, especially for long-term growth, but it’s an extra cost you’ll have to account for. Is it worth it? That depends on how much you’re investing and your tax situation, but for many, the £3 fee is a small price to pay for the tax benefits.

Withdrawal and Inactivity Fees

Unlike some other platforms, Freetrade doesn’t charge withdrawal fees. You can transfer money in and out of your account without penalty, which is a huge plus for investors who like liquidity. But what if you’re not trading regularly? Luckily, there’s no inactivity fee, so you won’t get penalized for taking a break from trading.

The Hidden Costs

While Freetrade’s fee structure is transparent, the real costs can be more subtle. Here are some additional hidden fees to watch out for:

• Slippage: Even though trades are commission-free, there’s still the issue of slippage—the difference between the price you expect to pay for a stock and the actual price you end up paying. This is especially true in volatile markets.
• Opportunity Cost: By locking some features behind a paywall (like limit orders or premium stocks), Freetrade forces you to either upgrade or miss out on potential investment opportunities. This is a form of opportunity cost that’s not immediately obvious but can affect your bottom line.

Comparing Freetrade to Competitors

How does Freetrade stack up against other platforms like eToro, Robinhood, or Trading 212? While all these platforms offer commission-free trades, they each have their own fee structures and hidden costs. For example, eToro charges hefty withdrawal fees, and Robinhood has been criticized for its controversial payment-for-order-flow model, which some say leads to worse trade executions.

When comparing platforms, it’s important to look beyond the commission-free promise and examine the full scope of fees and charges. Freetrade’s fees are lower than many traditional brokers, but they still exist, and savvy investors need to be aware of them.

The Verdict

So, how much does Freetrade charge? The headline is zero for basic trades, but when you peel back the layers, there are several fees to be aware of. From foreign exchange fees to the Freetrade Plus subscription, and ISA costs, Freetrade is far from a “free” platform. But in the grand scheme of things, their fees are relatively low and transparent compared to competitors. For most investors, the combination of free trades and low account fees makes Freetrade a solid option—just be sure to factor in the extra charges when building your investment strategy.

Remember, while Freetrade might seem like the ultimate free lunch, there’s no such thing as completely free in the world of finance.