The price charged for a service. Fees are applied in a variety of ways such as costs, charges, commissions, and penalties. Fees are most commonly found in heavily transactional services, and are paid in lieu of a wage or salary.


Individuals and businesses pay fees for a wide variety of reasons. An individual may pay a financial advisor a fee for helping choose and manage investments, and a family may pay a fee to a real estate broker when selling a home. A business may pay a fee to an accountant to help manage its books, and to a security company to make sure that the building is protected after work hours. Governments may charge fees for obtaining a business license or an individual passport. Investment institutions may charge a quarterly maintenance for accounts, and banks may charge overdraft fees when cardholders overdraw their accounts.

Fees are most often associated with transactional relationships, specifically with regards to professionals providing services. In some cases, a fee is charged when an individual hires a business to do a specific task, such as cleaning a house or filing taxes. This type of fee is often the most transparent and transactional, as it represents payment for the sole reason a fee-charging business was hired. Examples of transactional fees include mortgage fees and fees for wiring money.

Fees can also be charged in situations in which a customer requests additional services. These à la carte fees are commonly found in transactions related to travel. For example, a travel package may include the option of having ground transportation waiting for the customer upon arrival at a port of call. One of the more recognizable examples involves baggage on flights, as airlines often allow passengers to bring one carry on item for free but charge for any bags that are checked.

Fees charged by banks are less likely to be transactional in the sense that the account holder has not requested a service. In some cases, as when an account is overdrawn or a credit card payment is made late, a fee is charged as a penalty. In other cases, such as when a bank charges a monthly fee to checking account holders, the fee has little to do with the cost of maintaining the accounts. Regulations targeting the activities of banks has reduced or eliminated traditional sources of revenue, prompting these organizations to find other sources.

Investors who trade stocks, mutual funds, and options face a variety of fees. Equity trades often carry a per trade fee known as a trade commission, while options trades include both a per trade fee and a per contract fee. Fees paid for margin trading vary according to the outstanding margin balance, with a lower fee rate levied on higher balances. An investor looking to put some money into mutual funds may be faced with costs like the Management Expense Ratio (MER) and fees associated with load funds.

  1. Brokerage Fee

    A brokerage fee is fee charged by a broker to execute transactions ...
  2. Performance Fee

    A performance fee is a payment made to an investment manager ...
  3. Fee Structure

    A fee structure describes how an entity is to be compensated ...
  4. Loan Application Fee

    A loan application fee is a fee charged to a potential borrower ...
  5. SEC Fee

    A nominal fee that was created by the Securities Exchange Act ...
  6. Incentive Fee

    An incentive fee is a fee charged by a fund manager based on ...
Related Articles
  1. Investing

    8 Investing Fees That You Should Never Pay

    In investment management and financial planning there are a plethora of fees that are unnecessary.
  2. Investing

    Are Fees Depleting Your Retirement Savings?  

    Each retirement account will have a fee associated with it. The key is to lower these fees as much as possible to maximize your return.
  3. Financial Advisor

    Are Fees Eating Up Your Nest Egg?

    You may not be able to avoid all fees associated with retirement planning, but you should know what you’re being charged for. Here's a list of common fees.
  4. Investing

    A Guide To Investor Fees

    Fees are one of the most important determinants of investment performance and something that every investor should know.
  5. Investing

    3 Investment Fees That Are Negotiable

    Investment fees are a necessary evil but that doesn't mean they have to be overly costly. There are ways to negotiate some of the expenses down.
  6. Personal Finance

    The Ins And Outs Of Bank Fees

    These service charges could nickel and dime you right out of your nest egg.
  7. Retirement

    401(k) Fees You Need To Know

    Many workers are largely unaware of the various fees that their plans charge them, or what the fees are for.
  8. Investing

    12b-1: Understanding Mutual Fund Fees

    Many mutual funds charge investors a 12b-1 fee to pay for marketing and promotion expenses.
  9. Investing

    Mutual Funds: Management Fees Vs. MER

    Having a clear understanding of the fees charged by a mutual fund is a significant component to making an informed investment decision. Often the management fee is used interchangeably with the ...
  1. What kinds of fees are involved in futures trading?

    Learn what the various costs are that are charged by brokerage firms and trading exchanges to individual futures trading ... Read Answer >>
  2. Where do I look for fees that I am charged on investments? What are those fees called?

    The fees and expenses charged for investments vary. The fees usually depend on the type of investment and the investment ... Read Answer >>
  3. Why do mutual fund companies charge management fees?

    Learn why mutual funds charge their investors management fees, which include the cost of hiring investment advisors and various ... Read Answer >>
Hot Definitions
  1. Entrepreneur

    An Entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture. ...
  2. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  3. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  4. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  5. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  6. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
Trading Center