What Is an Activity Charge?

Activity charges are fees charged by banks in response to specific account activities, such as transferring funds between accounts or withdrawing funds using an automated teller machine (ATM).

The exact activity charges made by a bank will be outlined in the fee schedule associated with each of its bank accounts.

Key Takeaways

  • Activity charges are fees charged by banks in response to specific transactions.
  • The details of an account's activity charges will be laid out in its fee schedule.
  • Because consumers naturally wish to minimize the fees they pay, banks will often compete with each other by offering discounted activity charges.

Understanding Activity Charges

Depending on the fee schedule in question, activity charges may be based on individual transactions, such as fund transfers or withdrawals, or they may be triggered by the account holder exceeding a predetermined number of monthly transactions.

Understandably, customers will often seek to avoid paying activity charges as much as possible. For instance, consumers who want to avoid overdraft fees can sign up for overdraft protection policies; some banks will even waive overdraft fees for small transgressions, such as overdrafts of $5 or less.

Federal Regulations

In 2011, new federal regulations placed a limit of $0.21 per transaction on the activity charges permissible by banks on debit card transactions. Some banks responded to this cap by adding a new monthly fee for debit card users, in order to compensate for the lost fee revenues.

Another way that customers can reduce their activity charges is by specifically seeking out accounts with less onerous fee schedules. Many financial institutions, especially small community banks and credit unions, now offer checking and savings accounts that do not incur monthly maintenance fees. Generally, however, fees with low monthly fees will have relatively high activity charges, and vice versa.

Overall, reduced activity charges are one of the main ways that banks seek to compete for new customers. This is particularly true in recent years, as federal regulations now limit the amount of money that banks can charge for certain transactions, such as making payments through debit cards. Whereas some banks responded to these limitations by increasing their fee schedules in alternate areas, others have responded by keeping their fee schedules low and marketing themselves as a low-fee alternative.

Real World Example of an Activity Charge

One especially common type of activity charges are the fees levied for using an ATM operated by a bank other than your own. In these situations, the customer is often double-charged—once from their own bank and another from the bank operating the ATM.

Aside from ATM-related activity charges, other examples include minimum balance charges, which are triggered when the balance of a given account falls below a predefined threshold; overdraft fees, which are incurred when account holders withdraw more funds than were held in their account; and account closure fees. 

Additional examples include fees charged for making debit card transactions from savings accounts, fees for requesting paper copies of bank statements, fees for bounced or returned checks, fees for replacement cards, fees for sending or receiving wire transfers, and fees for dealing in foreign currencies.