What Is an Inactivity Fee?

The term inactivity fee refers to a service charge that banks and other financial institutions impose on their clients when there is no activity on their accounts. Inactivity fees are charged when certain accounts go dormant or when investors don't make any buy or sell orders in their 澳洲幸运5官方开奖结果体彩网:brokerage accounts for a certain amount of time. These fees are l💧egal and can be avoided by making at least one transaction per year or by closing the account altogether.

Understanding Inactivity Fees

Banks and other financial institutions charge their customers a variety of fees that contribute to their revenue. These fees, which are also called dormancy fees, include 澳洲幸运5官方开奖结果体彩网:monthly maintenance fees, overdraft fees, 澳洲幸运5官方开奖结果体彩网:foreign transaction fees, and inactivity fees. The l𒈔atter are charged when customers stop using their accounts for any reason.

Banks charge inactivity fees for diffღerent types of accounts, includ𒐪ing:

• 澳洲幸运5官方开奖结果体彩网:Checking and Savings Accounts: As the name implies, these charges are imposed when these accounts show no customer-initiated activity. This means the account becomes dormant and may incur an inactivity fee if the account holder doesn't make any deposits, withdrawals, or transfers or has any automatic payments/debits from going through.
• Brokerage and Investment Accounts: The firms that offer these accounts make money from 澳洲幸运5官方开奖结果体彩网:commissions on investor trades. When a customer makes infrequent trades, the brokerage doesn't make money from that customer. The broker can then try to compensate for the lack of commissions by charging inactivity fees. Smaller, passive 澳洲幸运5官方开奖结果体彩网:investors who make a small number of trades are the most disadvantaged by inactivity fees.

The amount charged to consumers for inactive fees varies based on the type ⛦of account. Banks may charge a certain dollar figure for an inactive checking or savings account. On the other hand, firms may charge a perce🍸ntage of the account balance for inactive brokerage or investment accounts,

The best way to avoid an inactive fee is to conduct a transaction, such as a deposit or trade, or to have an 澳洲幸运5官方开奖结果体彩网:automatic bill payment or 澳洲幸运5官方开奖结果体彩网:direct deposit go through the account. One other option is to 澳洲幸运5官方开奖结果体彩网:close the account.

Inactivity Fees and Credit Cards

Many credit card issuers charged inactivity fees to cardholders who didn't make any purchases within a certain period of time as specified in their terms and conditions. This practice became more difficult after the Credit Card Accountability, Responsibility and Disc🌺losure Act of 2009 was introduced. This law banned companies from charging cardholders for not using their cards.

Cardholders had to make sure they used their cards periodically to avoid incurring charges when these 澳洲幸运5官方开奖结果体彩网:dormancy fees were inꦇ effect. The time frame for considering an account inactive and assessing the fee depended entirely on the issuer. As with other accounts, the best way to avoid the inactive fee was to make a transaction. Closing the account, though would have been problematic for two reasons:

1. Consumers who closed their accounts would no longer have access to a card for emergencies.
2. It would have lowered their total 澳洲幸运5官方开奖结果体彩网:available credit and, therefore, increased their 澳洲幸运5官方开奖结果体彩网:credit utilization ratio, which may have led to a lower credit score.

Although the law mostly made dormancy fees illegal, card issuers can still charge consumers if there is no account activity for 12 months. The issuer must disclose the existence, frequency, and amount of these fees conspicuously before the card is issued and must not charge them more than once per month.

Examples of Inactivity Fees

There are many banks that charge thei🐎r cus🍬tomers inactivity fees when there is no activity that goes through their accounts. For instance:

• Alliant Credit Union charges a $10 fee on savings accounts when there is no activity within a 12-month period and if the account has deposits of $200 or less. Dormant fees are imposed on savings accounts that have no activity "within the period prescribed by applicable state law."
• Citizens Bank charges customers a $5 dormant account fee for accounts with a balance of $5,000 or less that don't receive any deposits or 澳洲幸运5官方开奖结果体彩网:withdrawals during a 365-day period.
• Brokerage firm TradeStation charges investors an inactivity fee of $10 per month for equities and futures accounts if the 澳洲幸运5官方开奖结果体彩网:account balance is less than $5,000. Traders can avoid this fee by making at least 10 trades during the previous 90 days.

The Bottom Line

Banks charge fees to their customers for a variety of reasons. You may be charged a fee if you don't maintain a minimum balance, if you overdraw your account, or if you fail to keep the account active. The latter is called an inactivity fee. You can avoid this type of fee by making regular transactions in the account or meeting certain criteria like maintaining a minimum balance.