Table of Contents What Is Account Activity? Understanding Account Activity Common activity charges can be applied to withdrawing money from an ATM (other than the institution's own), not meeting minimum account requirements, overdrawing an account, transferring funds between accounts, or — especially in the case of savings accounts — exceeding the allowed number of transactions. In finance and investments, account activity refers to the transactions made by a client in a particular brokerage or bank account. In finance and investments, account activity refers to the transactions made in a particular brokerage or bank account. In order to attract and retain new customers, XYZ is offering a promotion whereby clients can enjoy lower fees if they maintain account activity of at least 10 transactions per month.
What Is Account Activity?
In finance and investments, account activity refers to the transactions made in a particular brokerage or bank account. These include cash withdrawals, bill payments, wire transfers, and other such transactions.
Account activity is sometimes used in reward programs to determine whether a customer qualifies for a particular award. In other cases, financial institutions will offer lower fees for clients that maintain a large amount of account activity.
Understanding Account Activity
In banking, common examples of account activity include transferring funds between accounts or sending money through electronic funds transfers (EFT). For business customers, a common source of account activity is managing accounts receivable and accounts payable, as well as managing the employee payroll. Clients who use investment brokerage services will also generate account activity by placing trades or borrowing on margin.
Financial institutions will often offer incentives for clients to be active users of their accounts. From the firm's perspective, high activity is beneficial because of the various fees associated with it. However, it can also be beneficial because clients who engage in multiple types of transactions at one institution are less likely to switch from that institution to a competitor. For this reason, firms will often provide rewards programs, reduced fees, and other benefits for clients who are active users of their accounts.
In order to track and reward clients' account activity, banks and other financial institutions need to maintain detailed and accurate records of client transactions. In the past, this was done through paper recordkeeping, but today it is primarily electronic in nature. For instance, data can be automatically tracked and accounted for by online banking and mobile banking platforms. Likewise, credit card companies and brokerage firms can process transactions nearly instantaneously, typically without the need for any paperwork at all.
Today, manual recordkeeping is generally reserved for infrequent and substantial activities such as new account setups, mortgage applications, or requests for refinancing. These transactions typically involve in-person meetings with firm staff in which documents can be reviewed and signed in person. In some cases, third-party professionals may also be involved, such as lawyers, accountants, and appraisers.
A periodic summary of account activity with a beginning date and an ending date appears on an account statement. Most account statements for financial accounts are compiled monthly, but some may be done quarterly.
Example of Account Activity
Laura is a client of XYZ Financial, a large national bank. In her daily life, she uses XYZ's online and smartphone platform for most of her banking needs. Currently, Laura has a checking account and a savings account at the bank as well as a credit card which is held at a rival financial institution, ABC Credit.
In order to attract and retain new customers, XYZ is offering a promotion whereby clients can enjoy lower fees if they maintain account activity of at least 10 transactions per month. Laura estimates that between her two accounts she already generates five transactions per month through activities such as bill payments and cash withdrawals.
In order to bring her total up to the required level, she decides to close her credit card at ABC Credit and instead apply for one with XYZ Financial. She reasons that once her credit card transactions are counted toward her total, her combined account activity with XYZ will be sufficient to earn the reduced fees offered by the promotion.
An activity charge is a fee charged by financial institutions in response to specific account transactions or activities. Common activity charges can be applied to withdrawing money from an ATM (other than the institution's own), not meeting minimum account requirements, overdrawing an account, transferring funds between accounts, or — especially in the case of savings accounts — exceeding the allowed number of transactions.
The details of an account's activity charges should be laid out in its fee schedule and agreed upon when a customer signs the forms that officially open the account.
Account Statement & Examples
An account statement is a periodic summary of account activity with a beginning date and an ending date. read more
An account is an arrangement by which an organization accepts a customer's financial assets and holds them on behalf of the customer. read more
Accounts Payable (AP)
"Accounts payable" (AP) refers to an account within the general ledger representing a company's obligation to pay off a short-term debt to its creditors or suppliers. read more
Accounts Receivable (AR) & Example
Accounts receivable is the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers. read more
Activity charges are fees charged by banks in response to specific account activities, such as transferring or withdrawing funds. read more
A brokerage company's main responsibility is to be an intermediary that puts buyers and sellers together in order to facilitate a transaction. read more
A checking account is a deposit account held at a financial institution that allows deposits and withdrawals. Checking accounts are very liquid and can be accessed using checks, automated teller machines, and electronic debits, among other methods. read more
Issued by a financial company giving the holder an option to borrow funds, credit cards charge interest and are primarily used for short-term financing. read more
A fee is a fixed price charged for a specific service and is paid in lieu of a salary. A fee can also be additional charges on a good or service. read more