Freetrade is predicated on the idea of price innovation, so I think cheaper fees (if possible, none!) on currency conversion would be a great step.
Freetrade currently charge spot rate & 0.45% to convert currencies.
I understand this 0.45% charge is intended to cover the costs of outsourcing the remittance/currency conversion process, rather than generating profits, but it is a charge all the same. Whilst reasonable, I worry 45 basis points is just enough to deter users as cheaper alternatives exist
N.B. Ultimately, competitors use fee free FX as a loss leader to attract customers and then cross sell those customers awful, yet more profitable products. Fee free fx may well be axed when these competitors finally have to address any resultant freerider problem in pursuit of profitability. So whilst fee free fx might be unsustainable, maybe cheaper fees might be a compromise?
Please note foreign exchange at the interbank rate on demand is, in my view, a slicker, more user friendly proposition than multi currency accounts.
The latter involves converting funds, (potentially elsewhere/out-of-app) transferring said funds, holding them, etc and is not an on demand, instantaneous experience, in my humble opinion? Competitors (e.g. Robinhood, Revolut) offer the interbank rate and Iāve noticed this is a key point of difference that has appealed to some users here.
Thanks @ukcz, my mistake, no excuse other than lazy writing/research and possibly one pint too many
Iāve edited the post now with more accurate information. Also came to my senses that no fx fees isnāt necessarily sustainable, and simply cheaper fees than the current 0.45% markup might be a compromise.
Somethings gotta give though - with a +.45% markup itās often commercially not attractive to execute a trade as you straight away take such a big hit.
I know thereās no such thing as a free lunch, but FreeTrade also has ātradeā in its name and now it seriously limits my ability to trade in US shares, to the point that I will most likely do this in RobinHood as they hold your money in US$ so you only get penalised once.
Alternatively, would be really nice if I could just top up my account with USD, I honestly donāt mind having to convert my GBP to USD in revolut first ā¦
Agree allowing USD holdings is perfect, I realised that I have traded 10 times my current holdings over 10 months, paying roughly 30 quid a month on fx fees, not cheap!!
Trading212 charges effectively 0 (they say zero, I think people have quoted 0.01% elsewhere)
In the absence of Robinhood I guess these are Freetradeās main competitors.
I really think Freetrade should consider a reduced fx charge (maybe 0.1%) as part of Freetrade+. This might sound like it cuts down on Freetradeās income but I donāt think people paying Ā£10+ / trade are going to join/stick with Freetrade anyway. It seems they are likely going to go to a competitor so it should open up a range of new customers, better to earn something from them than nothing.
I wouldnāt mind the 0.45% FX fee if we could hold multi-currency accounts as it would then reduce the number of times you were charged the fee. If not, it should probably be reviewed against the competition.
Yeah multi-currency accounts would be good, are you able to do that within an ISA? I imagine for a lot of people their ISA is the biggest account (and responsible for most of their fees).
By law ISAs are only allowed to hold cash in sterling. You can buy ETFs which track the price of certain currencies but that does not get around the need to sell these in order to buy shares denominated in the tracked currencies.
This is potentially why Freetrade are not working flat out to implement multiple currencies (I believe it is not even on the roadmap) due to the fact that it is a feature which could not be offered to ISA users.
The last I know is that they donāt keep fx fees, and that they need to charge it to cover costs, has that changed after introducing Freetrade Invest Platform?
