The better brokers regard transparency as important and will alert you to their inactivity fees. The five brokers below are some of the most popular in the industry, and they do charge inactivity fees. Their fee programs may be similar in some aspects, and each may differ in the manner by which you can easily avoid these dormancy charges, but read on to gain awareness of each one.
A simple fact of life is that your broker does not make money if you do not trade. There once was a trend where brokers offered bonuses tied to trading activity, but regulators frowned on that practice, especially if the trading involved CFDs (contracts for difference). The prevailing practice now employed by many brokers is to charge an inactivity fee, sometimes only after three months of dormancy, and then monthly until the balance becomes zero.
The practice of charging these fees can be very annoying for the casual trader, but there are ample reasons for them. If we take the CFD example, a broker will only make its income from its spreads, commissions, and the net of losses and gains on CFD contracts. If you do not trade, then you are taking up space on the firm’s server for free. There are also clients who stop trading and do not fulfil bonus commitments for trades. A withdrawal cannot be processed, but the account balance can be reduced to zero more quickly than just by these fees.
One of the brokers that we will discuss claims that 22 million clients have traded on its platform since its inception, but the company’s annual report admits that there are fewer than 500,000 active traders on its platform on a monthly basis. There is obviously an issue of ‘clutter’ for this broker. If its software must pass through 22 million accounts to find yours, then there might just be an execution and timing issue. Archiving inactive accounts can solve that problem.
The pertinent question is whether every broker has bought into this practice? The answer is a definite ‘no’. Many brokers do not wish to offend their customers, but the majority of very popular brokers have adopted the practice. Casualty rates run high in forex trading, and brokers are continually archiving account data to make room for newcomers.
The ones that do charge broker inactivity fees do not make it easy to determine that fact. They do not see a need to broadcast this irritating fee. Information regarding it may be deep in the fine print of your trading agreement, hidden among a multitude of FAQs, or listed at the very end of a page that discusses fees and charges, though there is always the possibility that local law prohibits the levying of inactivity or dormancy fees.
The better brokers regard transparency as important and will alert you to their inactivity fees. The five brokers below are some of the most popular in the industry, and they do charge inactivity fees. Their fee programs may be similar in some aspects, and each may differ in the manner by which you can easily avoid these dormancy charges, but read on to gain awareness of each one.
XM is a major global forex and CFD broker that has handled more than 5 million clients since its founding in 2009. The details of its dormant fee may be found in its FAQs, as depicted above. After 90 days, a fee of US$5 will be deducted, if there was no trading activity as noted. Any remaining bonus or promotional amounts will be automatically deducted first.
AvaTrade has more than 300,000 registered global traders who trade on average 10 times per month. The firm is known for its care of its customers, but it has also instituted an inactivity fee that kicks in after three consecutive months of non-use, as per its FAQ section. If not prohibited by local law, a fee of 50 USD, EUR or GBP will be deducted each month after the Inactivity Period. Of the five brokers presented here, it has the stiffest fee.
Headquartered in Limassol, Cyprus, Libertex Group has been operating since 1997 and has booked 2.9 million clients since it opened its doors for business. It goes to great lengths to describe its commission for servicing inactive accounts deep within its legal agreements. As depicted above, it applies after 90 days. If you scroll down a bit from this legal definition, you will determine that the charge is currently US$5 per month.
Markets.com is a heavily regulated forex and CFD broker owned by Playtech, a London Stock Exchange company. It goes to great lengths to be transparent about its fees, but you have to dig a bit to find out about its activity fee. It does include it in its FAQs, but the above detail is actually from its legal agreements. Its inactivity fee is US$10, and it applies every month after 90 days of inactivity, as defined above. It does not apply in Denmark, where local authorities must have passed laws forbidding their assessment.
Founded in 2008, Plus500 is another global CFD provider, which is also traded on the London Stock Exchange. The firm claims to have serviced more than 22 million clients since it began operations. It also has an inactivity fee, which it is not ashamed to admit directly on its website. Its US$10 fee also applies after a three-month period of inactivity, but it offers a better deal than other brokers. In order to be exempt from the fee, you need only log into your account. You do not have to trade or make a deposit to avoid the imposition of this charge.
Inactivity fees are a reality for most brokers in the forex trading industry, primarily to remove dormant accounts from cluttering up their operating platforms and to generate additional revenue for maintaining trading privileges when not in use. When you review your broker candidates, you may have to look deeply into its FAQs or the firm’s respective trading agreements to find the details about dormant or inactive accounts. These fees may only apply if you do not log into your account, but they are more typically assessed when you do not conduct trades or make a deposit for an extended period of time. If you would like more assistance, please navigate through other areas of our website, such as the Compare Brokers page, where you may compare brokers’ features, along with fees, side by side.
