Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Inactivity Fee

What it is:

An inactivity fee is a fee charged by brokerages to clients whose infrequent trading does not satisfy a minimum trading requirement.

How it works (Example):

A brokerage house earns revenue from fees and commissions charged on accounts. To hedge against the chance that an account holder might not place enough orders to earn the brokerage sufficient commissions to make a profit, the brokerage may charge an inactivity fee on stagnant accounts.

Why it Matters:

Inactivity fees affect small and long-term investors, who don’t trade as often or in as much volume as other traders.