There are different types of fees charged by investment trading apps:
1. Share dealing fee
This is a flat fee charged by the platform every time you buy or sell shares. Some platforms do not charge a trading fee for shares, while others charge between £6 and £12 per trade. Most trading platforms charge a lower or even no fee for trading funds.
2. Platform Fee
This is an annual fee charged for holding the stocks and funds on your platform. Some platforms charge no fee for this, others charge a flat fee, and some charge a percentage, typically 0.25% to 0.45% of the value of your portfolio.
These fees are usually taken from your cash or you can pay the fees directly by debit card. However, the platform will likely sell some of your shares (as a last resort) if fees are not paid.
It’s also worth looking at the types of investments that incur a platform fee, as some platforms charge fees for holding funds but not for shares. When a platform fee is charged for holding shares, this is sometimes capped at a maximum amount per year.
There are two types of platform fee percentages:
- Tiered fee: This is the most common type of platform fee, where you pay different fees for different “parts” of your portfolio. For example, if you have a £300,000 portfolio, you might pay 0.45% on the first £250,000 and then 0.25% on the next £50,000.
- Non-tiered fee: only one of the platforms (Fidelity) charges a non-tiered fee, where you pay the same fee for your entire portfolio. For example, if you have a portfolio of £300,000 you would pay 0.2% on the entire £300,000.
3. Exchange Fee
When you buy or sell stocks denominated in a currency other than sterling, almost all platforms charge a foreign exchange fee. This is also known as a foreign currency conversion fee and typically varies between 0.5% and 1.5%. Some platforms also charge a higher trading fee for foreign stocks.
A small number of platforms allow you to hold foreign currency in your account, which allows you to convert it once and use that money to buy shares and hold the proceeds from selling shares in the local currency.
4. Other Fees
Some of the platforms charge other types of fees such as B. Inactivity fees and withdrawal fees (for accounts held in a foreign currency) and telephone trading fees.
While not technically a fee, platforms also make money on stocks’ buy-sell spread. For example, you might want to buy a stock with a 100-102 pence buy-sell spread. That means you would pay 102p to buy a share and get 100p to sell a share.
Some platforms may offer more competitive buy-sell spreads than others, and less traded stocks, such as B. FTSE Small Cap companies tend to have wider spreads than FTSE 100 companies