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.
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