3 Brokerage Account Fees to Watch Out For

Although most brokers have eliminated commissions, some are still charging other fees.

When you're picking a brokerage firm to invest your money, it's important you avoid incurring unnecessary costs. Any investment expenses you face can reduce your returns, making it more difficult to accomplish your goals.

The good news is, many brokers have eliminated commission fees for buying and selling assets, and have reduced or eliminated other costs as well.

But that's not necessarily the case with every brokerage you might be interested in working with. As you explore your options, there are three fees you'll definitely want to be on the lookout for. Here's what they are.

1. Minimum balance fees

Although most brokers don't require you to deposit a set minimum amount of money in your investment accounts, some do. If you pick a broker that has a minimum balance requirement and you can't fulfill it, you could find yourself paying a fee.

This type of fee can be especially damaging for a number of reasons. It can discourage you from investing until you have a big sum of money, which means you could miss out on opportunities to begin building wealth.

It could also put you into a difficult position if you need or want to move money elsewhere. You could be forced to choose between closing your account (and potentially paying a fee to do so) or getting hit with a fee every month just for not keeping enough money with the brokerage firm.

Plenty of great brokers allow you to maintain an account without a minimum balance requirement and without any fees for not investing enough. You may want to choose one of those brokers if there's any doubt about whether you'll be able to keep enough cash invested.

2. Account maintenance fees

Account maintenance fees are another expense that many, but not all, brokerage firms have eliminated. These are monthly fees you can't avoid since you're charged them for keeping your money invested with a certain broker.

You don't want to get stuck with an ongoing monthly cost indefinitely -- at least not unless you're getting a lot of extra perks for your money. So aim to steer clear of any brokerage firm that charges you just for keeping your account open.

3. Inactivity fees

Finally, inactivity fees are charged by some brokerage firms if you don't actively use your account. You could end up paying these if you don't make enough trades, for example. Unfortunately, this can be hugely damaging because it can affect your investing strategy.

Buying and holding assets for the long term can be the best way to invest your money and maximize the chances of earning a profit. But accounts that charge inactivity fees require you to buy and sell a certain number of times or a certain dollar value of assets over a set period of time. You could end up trading when you don't want to just to avoid these fees, or paying for making the smart choice of leaving your money alone.

You don't want to incur unnecessary costs or end up losing money unnecessarily from your investment accounts after working hard to build wealth. Be sure to check for these added expenditures before signing up with any brokerage firm.