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Glossary of brokerage
account terms
By Michelle
Samaad • Bankrate.com
- Account
minimum: The minimum amount
an investor must invest to open an account. Typically, anywhere
from $1,000 to $10,000.
- Brokers call rate: Interest rate
that brokers borrow from banks to cover the positions of their
customers who buy on margin.
- Certificate fees: The fee the broker
charges for sending share certificates. Once certificates are
received, the shares are in your sole possession.
- Dividend reinvestment plans: The
broker will reinvest dividends in additional shares at no extra
cost to the customer.
- Inactivity fees: The fee the broker
charges when you have not made a buy/sell during a specified period
of time.
- IRA custodian fees: The fee the broker
charges for maintaining your individual retirement account. May
also be called an IRA maintenance fee. Brokers also may charge
an initial IRA setup fee. Be careful of these fees. They can add
up.
- Limit orders: When an investor wishes
to buy/sell shares at some pre-determined price. For example,
if you wished to purchase Microsoft at no more than $90 per share
and it is at $95 now, you can place a limit order on Microsoft
at $90. These orders are usually more expensive than market orders.
- Market orders: When an investor buys/sells
shares at current market price.
- Margin rate: Brokers will typically
charge their margin customers a percentage above the broker's
call rate, depending on their account balance. This is termed
the margin rate.
- Online commission: Amount the broker
charges you for placing a trade online.
- Phone (touch-tone) commission: Amount
the broker charges you for placing a trade through a touch-tone
phone ordering system.
- Phone (human) commission: Amount
the broker charges you for placing a trade through a conversation
with a human being.
- Transfer of accounts: Amount the
broker charges you for transferring existing funds into and out
of your account.
- Wire transfer fees: Amount the broker
charges you for wiring transfers into and out of your account.
To
comment on this story, please e-mail the Bankrate.com
editors
Holden Lewis also contributed to this report.
-- Posted: Dec. 14, 1999
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