What is ‘Inactivity Fee’
1. A sum charged to investors who haven’t engaged in any buying or selling activities in their brokerage accounts for an amount of time specified by the brokerage.
Explaining ‘Inactivity Fee’
1. One way that brokerages make money is from commissions on trades. When a customer makes infrequent trades, the brokerage doesn’t make money from that customer, and it may try to compensate for the lack of commissions by charging inactivity fees. Smaller, passive investors who make a small number of trades are the most disadvantaged by inactivity fees.
Further Reading
- Physically active, low-income African American women: an exploration of activity maintenance in the context of sociodemographic factors associated with inactivity – www.tandfonline.com [PDF]
- Restoring rational choice: The challenge of consumer financial regulation – www.aeaweb.org [PDF]
- Stored Value Cards and Financial Institutions – www.questia.com [PDF]
- Regulating consumer financial products: Evidence from credit cards – academic.oup.com [PDF]
- Trading fees and efficiency in limit order markets – academic.oup.com [PDF]
- Economic interventions to promote physical activity: application of the SLOTH model – www.sciencedirect.com [PDF]
- Credit card pricing: The card act and beyond – heinonline.org [PDF]
