As tempting as the amenities provided by a brokerage firm may sound, ever wondered what’s in it for them? And why and how they are able to pull off these tempting offers to woo customers?

The answer lies in the different types of accounts a brokerage firm has to offer. There are usually three kinds of brokerage accounts, which are as follows:

Cash-management account  – It is the most basic kind in this category is an account where the investor places his funds in order to make a trade. Depending upon the type of cash-management account, an investor may choose to have a full-service account, which provides expert financial advisors, helps develop investment plans, and at the discretion of the investor, can be chosen as his power of attorney.

Margin account – A margin account is of a slightly sophisticated kind. In this case, the investor buys their securities with the money borrowed from his broker. However, these accounts have much stricter requirements and collaterals, and additionally, The Federal Reserve limits the borrowing margin to at most 50% of the total amount that was invested.

The discount brokerage account  – This type of account is ideal for the veteran investors who are looking to be more independent when it comes to trading and investing. These accounts offer minimal services for a much significantly cheaper fee compared to that of a full-service account. Some online brokerage accounts such as E*TRADE Financial simply only offer a secure platform, with no opening cost and a minimum deposit of as low as $500, with a commission fee of around $10 per transaction.