If you’re an investor, chances are you’ve heard of demat account charges online. Demat account charges are fees that are associated with your demat account, and they can eat into your profits if you’re not careful. In this blog post, we’ll show you how to avoid demat account charges so that you can keep more of your hard-earned money.
What are Demat Account Charges?
There are three primary types of charges associated with a demat account: account opening charges, annual maintenance charges, and transaction charges.
-Account opening charges are a one-time fee charged by the depository participant (DP) to open a new demat account. This fee is usually around Rs. 500-700, although some DPs may charge more or less.
-Annual maintenance charges (AMCs) are an ongoing fee charged by the DP to maintain your demat account throughout the year. This fee is typically between Rs. 300-600 per year, although some DPs may charge more or less.
-Transaction charges are fees charged by the DP for each transaction made in your demat account, such as when you buy or sell shares/securities. These fees are usually very small (between Rs. 10-25 per transaction), but can add up if you make a lot of trades in a year.
How to Avoid Demat Charges.
A zero balance demat account is an account where you are not required to maintain a minimum balance. This type of account is offered by some brokerages and is a good option if you want to avoid demat account charges.
Checking for Annual Maintenance Charges.
Before opening a demat account, check with the brokerage to see if there are any annual maintenance charges (AMCs). Some brokerages do not charge AMCs, while others may charge a nominal fee.
Minimum Balance Requirements
Banks and brokerages typically require a minimum balance in your account in order to avoid charges. For example, HDFC Bank requires a minimum balance of Rs. 10,000 in order to avoid a service charge of Rs. 150 per month. Similarly, ICICI Bank requires a minimum balance of Rs. 25,000 to waive the monthly maintenance charges of Rs. 400 per month.
To avoid being charged for having a demat account, make sure you are aware of the minimum balance requirements set by your bank or broker.
If you do not use your demat account for a prolonged period of time, some banks and brokerages may start charging you an inactivity fee. For example, Kotak Securities charges an inactivity fee of Rs 100 per quarter if there is no activity in the account for six months or more. To avoid this charge, make sure you keep your account active by periodically buying or selling shares TradingView.
Most banks and brokerages charge a transaction fee for each buy or sell order executed in your account. For example, ICICI Securities charges a transaction fee of Rs 25 per trade, while Zerodha charges a flat fee of Rs 20 per trade regardless of the trade value.
To avoid paying transaction charges, you can consider using a discount brokerage firm that offers zero or low transaction charges.
In conclusion, demat account charges can be avoided by opening a zero-balance demat account and checking for annual maintenance charges. By taking these simple steps, you can save yourself from paying unnecessary fees.
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