Whether inactivity fees are legal depends entirely on what kind of account the fee is attached to. Credit card issuers cannot charge you anything for not using your card. Gift card companies can charge a dormancy fee, but only after 12 months of non-use and only if the fee is printed on the card itself. Bank accounts, brokerage accounts, and digital wallets sit under looser rules that mostly just require the fee to be disclosed before you open the account. Some states tighten these rules further, and a handful ban gift card inactivity fees outright.
Credit Cards Cannot Charge Inactivity Fees
A credit card you never use should not cost you anything. Federal regulations implementing the Credit CARD Act explicitly list “account inactivity” as a basis for which no fee may be imposed.1eCFR. 12 CFR 1026.52 – Limitations on Fees The same rule also bars fees for closing an account or for transactions that get declined.
The ban traces back to a broader statutory requirement: any penalty fee on a credit card must be “reasonable and proportional” to a specific cardholder violation.2Office of the Law Revision Counsel. 15 USC 1665d – Reasonable Penalty Fees on Open End Consumer Credit Plans Not spending money is not a violation, so there is nothing for a proportional charge to attach to. Annual fees, late fees, and interest are all still legal, but each is tied to using the card or missing a payment. A dormant card with a zero balance should generate zero charges.
One caution. The issuer cannot fee you for inactivity, but it can close your account if the card sits unused for three or more consecutive months.3Office of the Law Revision Counsel. 15 USC 1637 – Open End Consumer Credit Plans A closed account reduces your total available credit, which can drag down your credit score. Running a small purchase through the card every couple of months is usually enough to prevent closure.
Gift Card Inactivity Fees Are Allowed Only After 12 Months
Gift cards, store gift cards, and general-use prepaid cards fall under federal rules that restrict dormancy fees without banning them entirely. Under the Electronic Fund Transfer Act and its implementing regulation, no inactivity fee can be charged on a gift card unless at least 12 months have passed with zero activity. After that one-year window opens, the issuer can charge no more than one fee per calendar month.4eCFR. 12 CFR 1005.20 – Requirements for Gift Cards and Gift Certificates
The disclosure rules are stricter than most people assume. The fee amount, how often it will be assessed, and the fact that it relates to inactivity all have to appear directly on the card itself. Disclosures tucked into a terms-and-conditions booklet, printed on the outer packaging, or stuck to a label do not count.4eCFR. 12 CFR 1005.20 – Requirements for Gift Cards and Gift Certificates If the card itself does not carry those disclosures, the fee is unenforceable no matter what the fine print says elsewhere.
The Five-Year Expiration Floor
Federal law also sets a minimum lifespan for gift cards. It is illegal to sell a gift card that expires less than five years after it was issued or last reloaded with funds, and the expiration terms must be stated clearly on the card.5Office of the Law Revision Counsel. 15 USC 1693l-1 – General-Use Prepaid Cards, Gift Certificates, and Store Gift Cards A card you receive today has to hold its full value for at least the first year and remain redeemable for at least five.
State Laws That Go Further
Federal rules set the floor. Roughly 17 states and territories either ban gift card dormancy fees entirely or impose restrictions tighter than the federal standard. In several of them, a gift card cannot lose any value to a fee at all, no matter how long it has sat. A handful also prohibit expiration dates regardless of the five-year federal minimum. Where state law bans the fee, state law controls, and the federal allowance for post-12-month charges does not apply.
Bank Accounts: Fees Are Legal If Disclosed
Checking and savings accounts have no federal ban on inactivity fees. The Truth in Savings Act, implemented through Regulation DD, requires banks to give you a complete fee schedule before you open an account, and any dormancy or inactivity charge the bank intends to assess has to appear on that schedule.6eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) If the fee was disclosed, the bank is generally free to charge it.
Regulation DD does require banks to keep paying interest on your deposits even after they classify an account as “dormant” or “inactive.”6eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) A bank cannot stop crediting interest just because you haven’t moved money in a while. On a small balance, though, a monthly dormancy fee easily outruns the interest. Reading the fee schedule for any account you rarely use takes a few minutes and is worth it.
Brokerage Accounts: Legal, Trending Away
Brokerage firms have historically charged inactivity fees, often $50 to $200 a year, when an account goes months or quarters without a trade. No federal rule prohibits these fees the way the CARD Act bans credit card inactivity charges. What the rules require is disclosure: FINRA requires broker-dealers to send quarterly statements reflecting all charges on the account, so any dormancy fee has to show up there.7FINRA. FINRA Rule 2231 – Customer Account Statements The SEC’s Regulation Best Interest also requires brokers to disclose material facts about fees before you open the account.
Competitive pressure has done more than regulation here. Most of the large discount brokers have dropped inactivity fees entirely. If your current broker still charges one, moving to one that does not is the simplest fix.
Digital Wallets and Payment Apps
Money sitting in a digital wallet or payment app usually falls under the federal rules for prepaid accounts rather than the gift card rules. Prepaid accounts have to disclose any inactivity fee on the short-form disclosure you see before opening the account, including the amount and the conditions that trigger it.8eCFR. 12 CFR 1005.18 – Requirements for Financial Institutions Offering Prepaid Accounts Unlike gift cards, general prepaid accounts are not automatically protected by the 12-month waiting period or the one-fee-per-month cap.
Some payment apps have charged monthly fees on balances that stay untouched for extended periods. Whether a particular charge is legal depends on whether it was properly disclosed and whether the account counts as a gift card (which triggers the stricter protections) or a general prepaid account. If you keep money in an app you rarely open, check the fee disclosure. Spending the balance down or moving the funds to a bank account avoids the question entirely.
When an Idle Account Gets Sent to the State
Inactivity fees are not the only way an unused account can cost you money. Every state has an unclaimed property law that requires financial institutions to turn dormant balances over to the state government after a set period, usually three to five years of no account activity. This process, called escheatment, runs independently of any fees the bank or broker charges along the way.
Once an account has been inactive long enough to hit the state’s dormancy period, the institution has to try to reach you. If they cannot, or you do not respond, the balance gets transferred to the state’s unclaimed property fund. You can reclaim the money later, but investments are typically liquidated at the time of transfer, so you lose any future growth on those assets. Logging in or contacting the institution resets the clock. For old accounts you have lost track of, that single step is usually enough to keep them active.
What to Do If You Are Charged an Illegal Fee
If a gift card issuer charges a dormancy fee before the 12-month period is up, skips the on-card disclosure, or charges more than one fee in a calendar month, that fee violates federal law. The same is true of any inactivity fee on a credit card. You have a few ways to push back.
Private Lawsuit
The Electronic Fund Transfer Act gives you a private right of action against anyone who violates the gift card fee rules. In an individual case, you can recover your actual losses plus statutory damages between $100 and $1,000, along with attorney’s fees and court costs. Class actions are available too, with total recovery capped at the lesser of $500,000 or one percent of the defendant’s net worth.9Office of the Law Revision Counsel. 15 USC 1693m – Civil Liability The statutory damages piece matters because it means a claim can be worth pursuing without large out-of-pocket losses.
CFPB Complaints
The Consumer Financial Protection Bureau enforces the federal rules on credit card fees, gift card fees, and bank account disclosures. A complaint through the CFPB’s online portal does not directly get your money back, but it creates a record the Bureau uses to identify patterns and bring enforcement actions.10Consumer Financial Protection Bureau. Enforcement Actions Companies that receive CFPB complaints have to respond, and in many cases the complaint by itself gets the fee reversed.
State Attorney General
If your state bans gift card inactivity fees, your state attorney general’s consumer protection division handles enforcement. A complaint there can trigger an investigation, particularly when a company is charging fees that break state law. For bank account dormancy fees that were not properly disclosed, your state banking regulator is another option.
Before any of that, start with the company. A direct request to reverse an inactivity fee, especially one that violates a disclosure requirement, often works on the first try. Name the specific rule you think was broken. Companies that know their footing is shaky tend to refund quickly rather than invite a formal complaint.