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.

Related Terms View All
  • Auction Market
    Though most of the trading is done via computer, auction markets can also be operated via...
  • Best Execution
    Let's assume you place an order to buy 100 shares of Company XYZ stock. The current quote...
  • Book-Entry Savings Bond
    Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to...
  • Break-Even Point
    The basic idea behind break-even point is to calculate the point at which revenues begin...
  • Calendar Year
    If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December...