What is an Inactivity Fee?
An inactivity fee is a fee charged by brokerages to clients whose infrequent trading does not satisfy a minimum trading requirement.
How Does an Inactivity Fee Work?
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 Does an Inactivity Fee Matter?
Inactivity fees affect small and long-term investors, who don’t trade as often or in as much volume as other traders.