Fair Comparison of Brokers: Interactive Brokers Tiered Pricing

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Fair Comparison of Brokers Interactive Brokers Tiered Pricing

A few days ago, I posted a comparison between Interactive Brokers and DEGIRO. It turned out from this comparison that DEGIRO was always cheaper than Interactive Brokers.

While the comparison was fair, I did a “mistake”. Indeed, one of my readers pointed out that I only considered Fixed Pricing of Interactive Brokers. I forgot to consider Tiered Pricing. Tiered Pricing is a much more complicated pricing system that Interactive Brokers offers. I was thinking that it was only an account for big traders. But it turns out it is not the case. Indeed, it may be cheaper in some cases.

In fact, I did two “mistakes”. I also realized I did not take currency exchange into account. With these two mistakes, I thought it would be best to update my comparison in order to be fair. I do not want to present incomplete comparisons on this blog.

In this post, I am going to present this pricing system and compare once again the two brokers. Thanks a lot to cashfl0w for pointing out my mistake. Once again, I always welcome comments, especially when they help me learn new things.

Investing involves risks of losses. Make sure you are aware of that before you start investing.

Interactive Brokers Tiered Pricing

Interactive Brokers Interactive Brokers is an outstanding broker, with extremely affordable fees! Trade U.S. security for as little as 0.5 USD! Sign up Today! Interactive Brokers

In the first comparison of the two brokers, I described in detail the Fixed Pricing system. It is really simple. There is a simple price for each exchange. You pay a base price based on the number of shares. There are a minimum and a maximum per trade as well. The minimum is very important since that is what we, simple investors, are ending up paying.

On the other hand, the Tiered Pricing system is much more complicated. You have to pay each individual fee in a separate way. What you will pay depends on which exchange you are trading. If you want to estimate your fees, you will need to do the estimation for each stock exchange you want to use. The Safe Custody fees of 10 CHF per month are the same for the Tiered Pricing system and for the Fixed Pricing.

For a United States ETF (NYSE), you will have to pay the following fees:

  • Interactive Brokers commission: 0.0035 USD per share, with a minimum of 0.35 USD and a maximum of 1.0% of the trade
  • Clearing Fees: 0.00020 USD per share
  • Transaction Fees: 0.00130% of the value.
  • NYSE Exchange Fees: USD 0.0030 per share

But there are a few twists. You only pay transaction fees when you sell something. This is great news for the long-term investors that rarely sell anything! And secondly, you do not pay the clearing fee if the total amount is less than 0.35 USD. Even though you should end up paying 0.36 USD for most trades, you will only pay 0.35 USD.

For a Switzerland ETF (SIX), the fees are:

  • Interactive Brokers Commission: 0.080% of the value, with a minimum of 1.50 CHF and a maximum of 49 CHF
  • SWX (EBS) Exchange Fee: 1.50 CHF per order and 0.015% of trade value
  • Trade Reporting Fee: 1 CHF
  • Clearing Fee: 0.538 CHF

Trading on SIX is much more expensive than trading on NYSE. On the other hand, you have to pay for currency exchange fees.

As you can see, the Tiered Pricing system is much more complicated than the Fixed Pricing system. However, it can be cheaper than the Fixed pricing in some cases. We are going to see in several examples if this can compare with DEGIRO prices or not.

Currency Exchange

Since I am paid in Swiss Francs (CHF) and investing about 75% in United States funds, I need to convert a lot of my Swiss Francs to United States Dollars (USD). In the previous post, I did not take exchange fees into account. This is something I am going to fix in the current comparison.

For most brokers, currency exchange is not free. In DEGIRO, you are going to pay 0.1% of the converted value for each exchange. It is the same for the two kinds of accounts of DEGIRO. In Interactive Brokers, you are going to pay a flat fee of 2 USD for each conversion. Once again, the price is the same for the Tiered and Fixed accounts.

Standard Investor

I am going to take the same scenarios as for the previous comparison. We are investing the same amount each month. Each fourth month, we are investing in a Swiss ETF. And all other months, we are investing in a United States ETF. Since our main currency is Swiss Francs, we have to pay currency exchange fees every time we invest in U.S. funds.

If you are interested in the Spreadsheets. I have shared it online: IB / DEGIRO Comparison Spreadsheet. Tell me if you got any questions regarding it.

We have already established that Interactive Brokers is expensive for a portfolio of less than 100’000 CHF. It is fairly easy to compute how much it will cost with a smaller portfolio. Unless you do a lot of trades, you will pay up the 120 CHF per year of custody fees. This is exactly the same for both pricing systems of Interactive Brokers.

The first investor example that we consider is starting with 100’000 USD and is investing 2000 USD per month. Here are the results in this scenario:

DEGIRO vs Interactive Brokers - Standard Investor
DEGIRO vs Interactive Brokers – Standard Investor

Which gives us a total for the four different accounts:

  • DEGIRO Basic: 33 CHF
  • DEGIRO Custody: 99 CHF
  • Interactive Brokers Fixed: 57 CHF
  • Interactive Brokers Tiered: 36 CHF

I am really surprised by the results. Interactive Brokers Tiered is significantly cheaper than the Fixed pricing. It is around 30% cheaper on that particular example. I am also surprised by the difference that the currency exchange fees make. It is significantly different from my previous calculations. Indeed, the Tiered account is now almost as cheap as DEGIRO Basic.

Let’s see what happens when we invest 5000 USD per month:

DEGIRO vs Interactive Brokers - Standard Investor
DEGIRO vs Interactive Brokers – Standard Investor

This gives us a total for the four different accounts:

  • DEGIRO Basic: 63 CHF
  • DEGIRO Custody: 140 CHF
  • Interactive Brokers Fixed: 57 CHF
  • Interactive Brokers Tiered: 37 CHF

It is interesting to see that Interactive Brokers Fixed account did not change at all. And the Tiered account only slightly increased. This is the advantage of the fixed base costs. They are expensive with small amounts. But they are getting cheaper with bigger amounts. And it is especially interesting to note that Interactive Brokers is cheaper than DEGIRO! Both accounts are actually cheaper! I was not expecting this! In fact, the Tiered account is significantly cheaper than any DEGIRO account.

Advanced Investor

We can take an example with an investor that already has 500’000 USD and is investing 10’000 USD per month. This investor is getting closer to Financial Independence (FI).  Here are the fees that he is going to pay:

DEGIRO vs Interactive Brokers - Advanced Investor
DEGIRO vs Interactive Brokers – Advanced Investor

Which gives us the following yearly fees:

  • DEGIRO Basic: 114 CHF
  • DEGIRO Custody: 426 CHF
  • Interactive Brokers Fixed: 57 CHF
  • Interactive Brokers Tiered: 39 CHF

Once again, the fees of Interactive Brokers almost did not go up. On the other hand, DEGIRO fees went up quite a bit. Once again, both Interactive Brokers pricing systems are cheaper than DEGIRO.

Does it really matter?

Yes! Fees do matter! You should always minimize the fees. Do not forget that what you do not spend on fees is invested in your portfolio. And all these savings are compounding year after year! Over the long-term, this is a lot of money.

Let’s take the case of the standard investor. DEGIRO Basic and Interactive Brokers are the same fees here. Between DEGIRO Basic and Interactive Brokers Tiered, the investor can save 26 CHF per year. That means you are going to save 1800 CHF in about 30 years with a yearly return of 5%! And if you were using DEGIRO Custody, you could save 103 CHF per year. That is more than 7100 USD after 30 years of compound interest. This is more than a month of your expenses! You do not want to give all that money to your broker! You want to keep it!


DEGIRO DEGIRO is a great broker for Europe, with extremely affordable fees! Trade securities for as little as 0.5 CHF! Sign up Today! Interactive Brokers

I think that my comparison between the two brokers is now complete. This time, I included the Tiered Pricing of Interactive Brokers and the currency exchange fees for both brokers. I am really hoping I did not miss anything this time.

This time, the conclusions are a bit different than before:

  1. If you have more than 100’000 USD (or CHF), you should use Interactive Brokers with the Tiered Pricing system.
  2. If you do not want your shares to be lent and have less than 100’000 CHF. You should use DEGIRO Custody account. Interactive Brokers is really too expensive for portfolio below 100’000 CHF.
  3. If you do not mind your shares to be lent and have less than 100’000 CHF. You should use DEGIRO Basic account.

In my opinion, the safe custody fees of Interactive Brokers is really their greatest disadvantage, by far. Without that, I would probably have directly have used them as my broker the first year. But they are actually cheaper than I thought. And DEGIRO is actually more expensive than I realized.

What does all this mean for me? In the last comparison of the two brokers, I have already established that DEGIRO Custody was too expensive. The fee on the dividends is actually more than I thought. My first step will be to see if I can switch from the Custody account to the Basic account. Once my portfolio reaches 100’000 CHF, I will have to consider switching to Interactive Brokers. If it is too difficult to switch accounts at DEGIRO, I may also end up switching directly to Interactive Brokers.

Once again, thanks to Cashfl0w for pointing out my mistake! And for reviewing the current post! I have not yet updated the previous comparison. But I will do it before the end of the year.

If you are interested in Interactive Brokers, I wrote a Guide on Opening an Account on Interactive Brokers.

What about you? What is your favorite broker? Which broker have you used?

Mr. The Poor Swiss

Mr. The Poor Swiss is the author behind thepoorswiss.com. In 2017, he realized that he was falling into the trap of lifestyle inflation. He decided to cut on his expenses and increase his income. This blog is relating his story and findings. In 2019, he is saving more than 50% of his income. He made it a goal to reach Financial Independence. You can send Mr. The Poor Swiss a message here.

33 thoughts on “Fair Comparison of Brokers: Interactive Brokers Tiered Pricing”

  1. Hi Mr. Poor Swiss,

    Thanks for the update (and to Cashfl0w for helping improve our knowledge)! I was waiting for this.
    I’ll update my own blog post and link back to this post so that readers of my blog can have a clear view on why DeGiro is interesting for a small (retail) investor and IB (or it’s partners, such as the Belgian Lynx) becomes more interesting for larger accounts.


    1. Hi Mr. Fight to FIRE,

      Yes, I was actually surprised myself by the results. There is less and less advantage to use DEGIRO in my mind for my investing scenario.

      I contacted DEGIRO and they cannot transfer anything for free between Custody and Basic accounts. So I am probably going to transfer everything to IB next year.

      Thanks for stopping by :)

  2. Nice job. This time, this, really is a “fair” comparison. I can certify the numbers are correct, at least for the US securities. ;-)

    Don’t forget to factor the switching cost (transferring securities between brokers or selling/buying your securities) + hassle/time of moving a whole portfolio (good luck calculating it too…) from one broker to another broker, when you want to calculate and compare the “real” cost of being on one broker vs another one for a period of time.

    I wonder if/how you can switch account type on Degiro between Basic and Custody ? I can’t even see my account type with their UI. I think I set it up as Basic… Would like to know if anybody knows more about it…

    So, even without currency exchange fees/forex, buying swiss securities on the SIX accounts for almost 5 bucks…. That’s not expensive, still ten times what you pay on the US exchanges (not counting fx)(!), but I wonder then why all these swiss brokers and banks charge you between $25 and $100 for any small/medium transactions… That basically accounts for a direct negative 1% – 3% on the return just for the fees themselves… Glad I don’t do business with these thieves. :-)

    1. Thanks :)

      Yes, it is going to be a major pain to switch broker! I am thinking that the best way is actually to sell everything and buy again later.

      I asked DEGIRO and they told me that the only way to change account type is to create a new account and do the transfer. That sucks because that way, you have to pay the fees in both directions. I will definitely not do that.

      The account type is visible in the web interface in the upper left corner. I also think it’s available in the mobile application somewhere.

      Yeah, I do not understand either how Swiss brokers can charge so much for the same service that some brokers are very cheap at providing.

      I am really thinking of moving everything to IB now. I will have to consider the advantages compared to the safe custody fees since my portfolio is well below 100K.

      Thanks for the help :)

  3. For anyone with >$100k, I think using IB is a no-brainer. Transferring positions is also not a big deal. I transferred some positions from my Schwab account to IB. It took a few days and cost $50.

    The main downside is the complex interface (but for simple trading, you can just use the web interface) and quote/data is charged separately. I maintain my Schwab account for this.

    1. Hi Phil,

      I am starting to believe the same indeed. If I only had to use CH positions, I would probably use DEGIRO. But since most of my invested money will be in USD, IB will be my choice once I have enough money invested.

      As for the interface, I am planning to use the web interface. The Desktop interface is really crazy!

      Thanks for stopping by!

  4. Awesome comparison. Would you be able to share the Google sheet so we can play with different scenarios? That would be super helpful!

      1. This is awesome. Thank you so much for sharing!
        I noticed you have some rows with “Hy/DE” or “Hy/IB”. Do you mind If I ask you what that “Hy” does refer to?

        1. You are welcome.

          Oh, that was for the first article, before I fixed the mistakes. I was wondering whether it was interesting to get both brokers to optimize. Hy stands for Hybrid. You can probably ignore everything that is hybrid I think.

      1. Thanks a lot for replying!

        I have 30k euros to invest, and was wondering if I should start with degiro or IB, hence my question concerning what you ended up doing.
        Even though it’s just 30k euros and IB will cost me around 108€/year due to custody fees (more than degiro), I plan on investing around 3k euros per month, so I might just begin with IB and soon (estimate: 18/19 months considering possible interest, etc) reach the 100k usd (90k euros).

        What do you think? Cheers.

        1. Hi,

          I would go with DEGIRO directly. It will save you the hassle of moving later to IB.
          If you are comfortable using IB later, you should directly start with them. It will also give you a nice goal to reach 100K to save money!

          Good luck with your investments!

  5. Hi,
    first off thanks for this post ! I would like to understand exactly which are the repercussions/issues of having my shares lent with DEGIRO basic account. Can you give some bad scenarios please?


    1. Hi Daniele,

      The risks are not huge honestly. It means that the shares are not held directly in your name. If DEGIRO bankrupts, it is going to be more difficult to get back your shares. It will make it more complicated and a longer procedure.
      The same may happen if the borrower defaults. The biggest risk is if both parties (DEGIRO and the borrower) default together. In that case, you are unlikely to see your shares again.

      It will also depend if your shares are actually borrowed or not. If you hold ETF, many will not be lent since not many people short-sell ETFs. If you have shares of companies directly, this could be very different.

      I hope that helps!

  6. Hi Mr. The Poor Swiss :)
    Very nice article! Thanks a lot for that!
    May I ask you something?
    I read that Degiro only has EUR as account currency… is that correct?
    That means, I send my CHF to the Degiro account and it will be exchanged to EUR. Than I buy every month for 1’000 USD an ETF.
    So I got a lot (around 13 per year) of currency exchanges. I didn’t find the commission for FX changes. And maybe more important are the bid/ask rates for EUR/CHF and USD/EUR.
    In the IB Demo account, I see they use interbank exchange rates. What rates do I get on Degiro?
    Thank you so much, and enjoy your time in our beautiful Switzerland :D

    1. Hi Roman,

      Thanks for your kind words :)

      No, that’s not correct. When I opened my DEGIRO account, it had a CHF base currency. Otherwise, it would be pretty bad as you said.

      As for the rates, I have not been able to find them out. From what I have read, it seems that they have worse rates than IB. And you will pay a 0.1% conversion fee on top of that. So for currency conversion, IB is much better.

      Thanks for stopping by!

  7. Awesome article.
    I shared it with a ton of people I know. Really in depth analysis.

    I was wondering if the introduction of the new IBKR Lite fee structure will change anything?

    Is it still better having the Tiered pricing structure or it’s better to switch?

    1. Hi BeardedGuy,

      Thanks for sharing my article :)

      For most people, it won’t change much. For U.S. people, it could be a game-changer. Only U.S. ETFs will be free, not any other ETF. And since we may lose access to these next year, I am not considering changing for now. Maybe next it will become more interesting to change.

      What do you think?

  8. Another great article. Thanks for sharing this info!

    However, with EU residents now limited to buy only ETFs domiciled in the EU (I don’t use IB, so I’m not sure this is in place already), IB would charge a 0.050% commission fee (min € 1.25 / max € 29.00 p. trade) if you trade <= 50M (which is probably the case for most of us). DEGIRO, on the other hand, charges € 2.00 + 0.038%. Depending on the amount being invested (e.g. +17K), DEGIRO can be cheaper (I'm not even considering additional fees that IB charges, such as exchange fee, clearing fee, …). Not to mention that an extensive list of ETFs are free of charge. Moreover, if the investor lives in a country where Euro is the currency, the currency exchange fee + potentially lower rates could be avoided.

    The main downside re DEGIRO in my opinion (this applies only to my case tho) is the dividend processing fee in the custody account. To avoid that, I'm buying dividends accumulating ETFs (which are not free). But that introduces new trade-offs that you explained in another great post.

    I think I will stick with DEGIRO for while until IB becomes a no-brainer.

    1. Hi Investor,

      Thanks for the kind words!

      For EU residents, this is in place in IB, yes. But it’s not yet in place (and may not be in place) for Swiss residents.
      It’s true that if we remove U.S. products from the equation, DEGIRO may become cheaper again. That’s a very good point.
      If (hopefully not) we lose access to this in Switzerland, I will do the comparison again for my European portfolio.

      Accumulating ETFs can indeed alleviate the issues of the custody account! That’s a good idea. And since you know the trade-offs, you are on the right path!

      Thanks for stopping by!

  9. Hey Mr. poor Swiss,

    Thank you so much, you cannot believe how valuable your comparisons are, since I am also in the similar position as you and find our Swiss brokers too damn expensive!
    I am currently using degiro custody account (recently started), but plenty of stocks are missing on degiro, e.g. Indian stocks.
    Do you know how much better IB is in that sense, should I switch to it before its too late?


    1. Hi Boris,

      Thanks for your kind words :)

      I think that you have access to the India stock market from IB, yes.
      However, the biggest advantage is that we still have access to the U.S. stock market.
      Now, I would actually wait a little until I did the switch. New Swiss laws are going to be in effect next year. So it may change access to U.S. ETFs. Without that, I would not switch.

      Thanks for stopping by!

  10. Dear Mr The Poor Swiss,

    This article is very helpful.

    I am curious about your experience with currency exchange.

    I am considering IB for a portfolio that has a similar proportion of US shares as yours. (70% USD 30% CHF). I get paid in CHF. I gathered you opened your IB account with CHF as base currency. Did you consider USD?
    For transfer of cash to your account, did you try using TransferWise or other similar services?

    I am currently with Degiro and thinking of leaving.

    Have a great evening.
    Mr. Arouet

    1. Hi Mr. Arouet,

      Thanks :)

      Yes, I have opened an account in CHF. And I am transferring directly CHF to my accounts. However, I am also receiving some USD when I sell shares from my company and this also gets directly to IB since they also have a USD account. So you can transfer both without issues.
      The base currency does not matter a lot. But I compute my net worth in CHF, I like to have the value in CHF at IB.

      I did not try using TW for transferring cash since transferring cash to IB is free for me. And I am not really comfortable having large sums of money on TW/Revolut and co.

      Thanks for stopping by!

  11. I’m glad I found your blog and I have a few questions.  I’m a UK resident but I used to work in Zurich and still have my UBS account there earning 0% interest or thereabouts. 
    I intend to buy US domiciled (ishares/vanguard) ETF’s and from your blogs it looks like what I need is IB.  I have more faith in the CHF than GBP for obvious reasons.  I won’t open my IB account till there is a correction in the US markets and the questions are:

    1) Even though I will probably only be buying USD denominated shares should my base currency be CHF?

    2) My understanding is if I have 100,000 CHF is my base currency then I will be able to trade in USD without having to physically convert but I would be exposed to CHF/USD currency risk.  Is my understanding correct?

    3) If my understanding above is incorrect and I have to convert CHF to USD then what is the exchange rate margin that IB offer?  This is something that I have not been able to find out on their website.  In an ideal world IB will offer the interbank rates plus a fixed fee on top!   Or should I use Currency Fair to transfer USD to IB? 

    4) I can currently see NYSE stocks so presumably they have not barred access as yet or may be I’ll find out once I open my account and residency has been confirmed.

    Thanks in advance

    1. Hi Lakshman,

      1) I do not think it matters much. My rule of thumb is that if you are going to transfer CHF to your account, your base currency should be CHF. If you are going to be transferring USD to your account, use USD as your base currency. A second rule of thumb would be based on which currency you wish to appear in the report. But you can change the base currency of your currency.
      2) I do not understand your question. The 100’000 CHF is the limit after which you do not pay the 10 CHF per month custody fees. As for buying without converting, this would be hedging. There are some funds that are hedged to CHF. This will actually negate the currency risk. But you will pay hefty fees instead which is probably more of a risk. If you convert to USD and buy an ETF in USD, you will still have currency risk.
      3) IB is very good at exchanging currency. They are using the interbank exchange rate and are adding a small fee (about 2CHF for most transactions) on top of that.
      4) I do not know about the UK, but I can still buy U.S. ETF on IB.

      Thanks for stopping by!

      1. Thanks for your response. Question 2) is made redundant by your answer to question 3). I will open an IB account with a CHF base as they offer interbank rate plus fee for USD purchases.

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