I asked reader Dan if he would be willing to share his thoughts on Credential Direct, a brokerage with which he is familiar and I am not. Dan wrote back with the following review (Thanks Dan!). You can also check out the reviews of other discount brokers: Qtrade, Questrade, RBC Direct, TD Waterhouse, BMO InvestorLine and Scotia Direct.
Last fall I started to look around for an online broker for my RRSP account. I was tired of paying $125 for the yearly administration fee, along with the $80 plus sales commission fee. I had an RESP account with TD Waterhouse at the time, so I used it as my benchmark.
Credential Direct was founded in 2000 by Canada’s credit union system. You do not need to be a member of a credit union to open an account. It is a division of Credential Securities, which is a CIPF member.
I was very impressed with Credential Direct for a number of reasons:
Account fees
The first thing that caught my eye was the annual RRSP fee is only $50. This fee is waved with $15,000 or more in the account. There is no inactivity fee. When I opened my RRSP account a Canadian dollar and a U.S. dollar cash account was opened at the same time.
Trading fees
The fee for trading stocks is $19 for 1000 shares or less or a trade value of $2,000 or less.
If you trade 1001 shares or more and stocks priced $1 or less the fee is 1% of the trade value. For trades with 1001 shares or more and stocks priced $1.01 or more, the fee is 2 cents/share. Options are $19 plus $1.25 per contract. The maximum fee is $250. Also if you spend over $2,500 in one month on commissions, you get a 10% rebate. These fees are web based only, add $14 for telephone orders. If you are an active trader online, which is 25 trades per quarter or more, the fees are a flat $9.95. Options would be $9.95 flat plus $1.25 per contract.
Here is a link to an excellent comparison chart with other major online brokers.
Mutual Funds
Credential Direct seems to have access to all of the different mutual funds that you will find elsewhere. CD does not charge any fees to purchase or redeem funds, but the mutual fund could still charge you. The transaction amount must be $1,000 or more or the fund company minimum, whichever is greater. Money Market fund purchases are a $2,500 minimum purchase.
Fixed Income
Credential Direct also seems to offer a wide selection of federal, provincial, municipal, corporate, coupon and money market issues. I am not very well versed in bond sales, yields, etc, thus I can not give much insight into this.
Research
Credential Direct, has a Tools tab which has a portfolio section, technical events section, a technical screener, financial screener, options screener, options valuation section and a mutual fund screener. The technical event section uses the Recognia Technical Analysis service, as does TD Waterhouse.
You get free real time quotes and free level 2 quotes. For me this was a big plus. You can also transfer money to and from any bank account in Canada (there are a few rules regarding the transferring money out of registered accounts, nothing major), again a big plus as there is no need to change banks to transfer money.
You also get online statements, an account history, performance, holdings and account summary. A research section with daily research papers from Desjardins Securities, Stockhouse Bullboards, Stockscores weekly newsletter and Stockscores signal and sentiment scores plus fairly good charts. They do not have a real time chart during market hours; it works on a 20-minute delay like most places.
Other Comments
You can have a cash account, a margin account, a margin account with short sales, or an options trading margin account. These can be in CDN or US funds. I do not know if you can do a “wash” trade in the RRSP account.
You can fill in the application forms online; print them off to sign, then mail. I have phoned the customer service a few times and the people were first rate, courteous and professional.
The website itself is good, and easy to read. I have had no problems with it. I have found the odd time that the server seemed a bit slow, but not painfully slow. I would anyone considering a discount broker to have a good look at Credential Direct; you will be surprised at everything that is there.
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7 responses so far ↓
1 FourPillars // Aug 20, 2007 at 10:36 pm
A wee bit off topic - I just noticed on my browser tab that you have a new symbol for your site - pretty cool, I’ll have to try that.
Good review Dan.
Mike
2 jml // Aug 20, 2007 at 11:29 pm
Here’s another +1 for CD’s phone support: Everytime I called, their reps were very friendly and professional. One rep even followed up on an issue via email several days after my intial call. I couldn’t say the same thing about certain other discount online brokerages in Canada.
3 nancy (aka money coach) // Aug 25, 2007 at 1:07 am
I’ve used C.Direct for a couple years now. I’ve consistently received good service, plus there’s a bit of a ‘feel good’ factor in giving business to a brokerage that’s essentially a credit union.
4 John // Sep 9, 2007 at 8:22 pm
This is not a review. It’s just a list of features. A review would talk about your opinion of or your experiences with Credential Direct, not just list what they offer.
5 anonymous // Apr 24, 2008 at 7:23 pm
I have used both Credential Direct and BMO Investorline. The fills on Credential Direct are slow. I do not recommend Credential for active traders. I highly recommend BMO, the fills are instant as soon as you hit submit. Credential is only good for placing longer term trades.
6 Limited Wash Trades at Credential Direct // Jun 3, 2008 at 5:04 pm
[...] thanks to Charles for the note Credential Direct (read review here) is now washing rates when U.S. Dollar denominated securities are bought and sold in RRSP accounts [...]
7 Randy // Jun 20, 2008 at 7:27 pm
I decided to go with Credential Direct as my online brokerage as well, based on what people were saying about it versus others. Having lived in the US for the first ten years of my career, I’m disappointed I require such a thing at all, as I’m used to dealing with mutual funds directly, and therefore keeping more of my own money. Anyway, Credential Direct makes a big show of being very secure, and they also offer email as one of their ways to communicate back and forth. But a big security hole is the email. They don’t offer any kind of secure email, despite the ready availability of cheap and even free email certificates from companies such as Thawte, that could be used to encrypt email communications and keep them safe from interceptors. When I raised this issue to them, they told me that they can’t bend to every client’s unique safety issues. This, after they sent both my account password and my trading password in plaintext via email. Fortunately I was able to change the passwords almost immediately, because I was at my PC when it received those emails, but this is a rather major security lapse, not something unique to me, and must be fixed.
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