How to Get Paid By Your Bank – Monthly Bank Fees Update

Nobody likes to pay banking fees. But most monthly service charges can be waived if we sign up for additional accounts/services, or keep the minimum monthly balance in the account. (eg: maintain at least $1,500 in a Bank of Montreal chequing account to waive the $4 fee.)


My personal account is with TD Canada Trust, which charges $3.95/month unless a minimum balance of $1,500 is held in the account at all times. But sitting on unused money can be a waste of capital. 😕 So 3 years ago I introduced an alternative solution to deal with those pesky bank fees. Rather than pay the bank to hold my money, I made the bank pay me instead! 😉

Hedge Bank Fees with Bank Stocks

Here’s what I did in a nutshell.

  1. Transfer the $1,500 from my chequing acct to my brokerage acct and use it all to buy TD shares (38 in today’s shares)
  2. Receive dividend payments every quarter as a TD Bank shareholder
  3. Use said dividends to pay for the $3.95 monthly service fee associated with my chequing account

(see my original post from February 2012 for more details.)

Since it’s been a few years I thought I’d post an update to show how my strategy has turned out so far.

2012 – Paid $3.95 x 12 months = $47.40 in fees. But also received $56.24 in dividend income. Difference = +$8.84
2013 – Paid $3.95 x 12 months = $47.40 in fees. But also received $60.80 in dividend income. Difference = +$13.40
2014 – Paid $3.95 x 12 months = $47.40 in fees. But also received $71.44 in dividend income. Difference = +$24.04
Net gain = $46

Yay. 😀 Rather than keep $1,500 in my bank account which wouldn’t have earned me any interest, I put that money to work instead and have successfully made my bank pay me $46 over the last 3 years. And here’s a list of other benefits I also get to enjoy. 😉

  • TD increased its dividend payments by 27% since 2012 and will likely continue to raise it over time.
  • Even if my monthly account fee was raised to $5/month my TD dividends income would still be more.
  • I don’t have to worry if the minimum balance to waive the monthly account fee was increased from the current $1,500.
  • TD shares are now 30% higher than 3 years ago. This means my $1,500 initial investment in TD is now worth $1,950! 🙂

Wow! This is so much win. The primary point of this hedging strategy was to save money on banking fees, but apparently it has also made me $450 (capital appreciation) + $46 (net dividend earnings) richer! And it’s all passively generated, so no work was required besides the initial stock purchase. Below is a 5 year stock chart of TD. (click to biggify)


Having the Right Attitude 

The poor and middle class often think it’s either me or them; it’s one or the other; if he earns more money then there’s less money for me to make. But financially successful people think in terms of both. Instead of either or, rich people will try to find mutually beneficial outcomes for both parties. I believe the way to become rich is to adopt this both mentality. 😎

Instead of thinking “how can I prevent the bank from taking more of my money,” we need to consider instead, “How can both of us make money?” Through this win-win type of thinking we can discover new ways to tackle old problems like with banking fees. We can pay our monthly account fees so the banks can make more money. And then we turn their profitability into our advantage by owning a piece of their company, and thereby also being entitled to a portion of all their future profits. 😉

Of course the risk with my strategy lies in the possibility of a dividend cut, or even worse, a bank failure. 🙁 And if there was an earthquake a bank could potentially go into default. 😀 But those are minor risks I’m willing to take given the potential upside I’ve seen so far.

Other methods to save on bank fees include politely asking your bank to waive your fees, consolidating all your accounts to one financial institution, and switching to a no fee bank account with a credit union or an online bank, eg: PC Financial or Tangerine.

It may seem counter intuitive to mitigate banking expenses by purposefully paying them, but the world of finance can work in strange ways. 😀 We just have to think big picture!

Random Useless Fact:
In Canada, average life expectancy for males born in 2012 is 80 and for females 84, according to World Health Statistics.


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02/03/2015 7:40 am

Hi LI;
Never thought of it that way. Comes down to, as you say, having the right attitude.
Most people, including me, just see the money being saved (or not charged) by holding non-utilized funds in a bank account.
Unfortunately it always seems necessary to have some cash on hand for the end of the month Visa or whatever so I think i would find it hard to hold a near zero balance in the account. Considering that my pay is direct deposit there is money coming in every two weeks so it is fluctuating all the time. If I have more money than that it gets funneled off to a high interest account – $5K minimum.
But I really like the thougt process.


02/03/2015 7:54 am

My TD chequing account just increased the minimum amount necessary to avoid fees to $4,500. My account fee is about $14 per month. I love TD but I don’t have $4,500 to leave in a chequing account and probably never will.

I am going in later this month to do some RRSP stuff and will discuss this fee with my bank adviser. I am prepared to switch banks if I can find a better deal elsewhere.

02/05/2015 11:38 am

I just quit my bank. After a decade with TD they just don’t care that I don’t have $4,500 to meet the minimum monthly balance to avoid the high fee. There is no wiggle room. I would have to work 9.5 hours to pay the yearly bank fees and I can think of better things to do with my money.

I was actually shocked that there was no room for any negotiations. A firmly worded email has been sent to head office but it is very clear that they just don’t care about me and my small potatoes.

02/03/2015 8:09 am

@ Beth;
Don’t be afraid to hold their feet to the fire.
I don’t know how old you are but if you are over sixty then they usually have lower fees. I know the CIBC does. Do some homework first to see if there is a better deal at another bank and then just lay it on the line to them. You are their customer. They are there to serve you (retain your business) so you ALWAYS have theupper hand.
Keep us informed as to your negotiations.


02/04/2015 7:07 pm
Reply to  RICARDO

I have an appointment tomorrow with TD to discuss fees and the other offers I have seen. I found 2 good free accounts. 1 with PC and 1 with ING. They have free accounts and offer sign up bonuses. I am prepared to walk if I can’t get a deal.

I will have to leave my small brokerage account with TD because they charge a fee to transfer or close RRSP accounts. I believe it is $250. I have $17,000 in Vanguard ETFs and some TD stock there but it can just sit and collect dividends for 8 or 10 more years until I want to start drawing on it.

02/03/2015 9:39 am

Just sever ties with the big five banks and enjoy the freedom of NO FEES from online banking like Tangerine & PC Financial or if you really like having a branch… then Coast Capital has a no fee chequing account. There are so many other alternatives for no fee accounts. Just the matter of stepping out of your comfort zone. I don’t get why people are still paying fees for a chequing account when living in the 21st century. Mind boggling to me.

02/03/2015 12:09 pm

Another way to do this is to transfer your bank to a local credit union. Having said that, we bank with both TD and credit union. Your hedging method sounds like a great idea, I need to look into that. 🙂

02/03/2015 1:24 pm

all most all the bank in the US will waive the fee if you have direct deposit from your job. So, I haven’t faced this issue yet. Having said that I’m happy to see that BMO is making a killing with its $4 fee 😛 as I’ve initiated a position on BMO. Too bad the USD is strengthen, so I think the profit will drop when BMO reports in USD.

02/03/2015 1:32 pm

I need to work the math on this. I have a no monthly service charge account at Scotia but they charge $1 per withdrawal. I need to see how many shares I need to cover my annual bank fees and consider purchasing some shares 🙂 The Scotiabank shares have been taking a beating lately.

Amanda @ My Life, I Guess
Amanda @ My Life, I Guess
02/03/2015 2:37 pm

Ha! This is brilliant! I was honestly expecting to read about one of our favourite banks that offers free banking, so I was surprised to read about a whole other strategy. Maybe I’ll have to copy this idea…?

02/03/2015 7:07 pm

Great article! I like the approach.
I actually wrote something about this on my blog titled “Why I hate having money in my chequing account”. I used to kept the $1500 in my account to prevent fees but it ate me up having so much money sitting there not working for me, so I closed tho account.
Now I have a bit of a different strategy. I keep as little money as possible in my free chequing account and shift the rest to my brokerage account where I invest in two index funds. It’s not as direct as owning the actual bank, but it does make it a lot easier and provides a bit more diversification!

@Tawcan Your Credit Union offers a no fee account? I was paying over $4/month back in the day at old credit union I think. Part of what made me jump ship.

02/04/2015 4:34 am

I am with the other who have said just move your accounts to somewhere that doesn’t have the fees. Then invest in banks anyways. So instead of just being up 24.02 you are up the entire 71.44. So basically you are giving up over 50% of your profits for no real reason… I don’t know about you, but losing 50% for something that is entirely preventable seems silly to me

02/04/2015 9:01 am

This is what you were explaining to me when I was complaining about bank fees… interesting idea indeed. Not sure I’ll go for it myself, but it definitely makes you think about things in a different way. As always, thanks for making me see another perspective and getting me to think.

Investing Pursuits
02/04/2015 6:56 pm

This seems like a great idea. The good thing about this is that you can walk into the bank and deal with them face to face whereas tangerine you can not see someone face to face. On top of this, the banks in Canada are one of the best in the world. I now own shares in 3 canadian banks.

02/04/2015 6:59 pm

With all the business you do with them, why don’t you just get them to waive your account fees?

02/13/2015 4:52 am

That’s surprising to hear from the people’s bank of TD. I’m with CIBC and BMO and they both do it, although only 1 year at a time and I need to ask every year.

02/05/2015 11:26 am

Great Posting,

RBC has a multi-product rebate if you have 3 services through them. I know I’ve had a $4 charge, then a +$4 rebate every month for years. I obtained their RBC Visa Gold at one point to avoid paying car rental insurance – a move that saves me hundreds per year as well.

02/06/2015 5:35 pm

Very creative approach, but I don’t see where you’ve factored in taxation. I would expect that after tax, the dividend income alone would not cover the fees. When bank shares were rising, as they do over time, the capital gains put you in the black, but you still run the risk of losses. I think a better strategy yet is to put the $2500 in a bank stock, and your account with PC Financial or Tangerine, so you get the dividends and the capital gains, after tax, and never have to net out the fees.

Chatter Around the World - 82 - Roadmap2Retire
02/07/2015 5:06 am

[…] How to Get Paid By Your Bank – Monthly Bank Fees Update by Freedom Thirty Five […]

02/14/2015 6:30 am

Unless your shares were purchased in your TFSA, a net gain of $46 isn’t true because you have to pay taxes (less dividend tax credit) on those gains.


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