Wow, Bank of America is going to offer up to 30 free trades per month if you have a combined $25,000 or more in deposit accounts with them. And, it publishes (see screen shot to right) its other discount rates if you don't meet that criteria. I think this is a problem for the discount brokers (BTW - I can not profile E*Trade as part of this post) because this combination makes BofA a powerhouse that can survive the ups and downs of the stock market (when it is a bear market people trade less). Plus, it services almost half the US households, at least according to this BusinessWeek article.
Bank of America has checking, credit cards (old MBNA), and brokerage making it unique. WellsFargo offers a similar combination of services and free trades at the very high end. AmericanExpress also had a free trade program a few years back, but as I recall they got killed on the transaction fees. We even had the strategy with Harrisdirect when we combined services with Harris Bank. The problem with our strategy was we didn't have a large enough footprint of Harris Bank customers to draw from, but we were working hard at offers right up until the acquisition went through.
WellsFargo and Harrisdirect are/were not big enough. American Express certainly is, but doesn't have the banking products. BofA has all of that plus 5,700 locations and 16,000 ATM machines to use for marketing. Plus, really the fee on the stock trade is not that important.
What??? Yes it isn't that important. Sure if you day trade, the fee is an issue especially for same day/same side orders, but for the people that BofA is going after (the masses) they don't trade that often (as I recall 4 trades per year or so) and if they are trading in 100 share lots, they should care even less about the price. Check out the stock charts below for the major brokers and you'll see why. For example, 100 shares of Schwab would be $1722 plus your trade price. Does it bother you if the price of the transaction was $1722 or $1732? If you wait long enough once you've decided to make a trade you can cost yourself more than that. Try chasing a stock up or down while placing a limit order and you'll see what I mean. That's why having a sound plan, tools, and research are more important.
So, what if BofA doesn't have the tools. If you are serious enough, you can get research and trading ideas from The Street.com, Motley Fool, Yahoo Finance, and others. Heck, you could go to Bloggingstocks.com for ideas. You want research, you have to pay for it. Charting and other tools you can find elsewhere. At the end of the day, BofA should scare all of the discount brokers because of their reach, ability to bundle price, and 1:1 marketing capabilities. If you are with a discount broker (which I am not), why are you there other than price? I'm sure you go elsewhere for trading ideas and the latest news and information. Now you can use those same sources and trade for free if you are a Bank of America customer.