Avoiding Wells Fargo's service fee

Well's fargo (like most banks it seems) charges a service fee to have a checking account with them. They offer ways to waive the fee so that you can get effectively free checking if you meet their conditions. For most people their conditions are probably not that hard to meet, but for me they required some effort.

Not meeting their conditions is not good as their service fee is a bit extreme I think at $12 per month. That's not something I'd interested in paying if it can be avoided. As of writing this avoiding the fee requires meeting at least one of these conditions every month:

  • Daily minimum balance of $2000
  • Direct deposit of at least $750
  • At least 10 transactions using your debit card

If you can meet those conditions each month then great, your covered. For most people this is probably relatively easy through either having their pay check getting direct deposited or by simply using their debit card when shopping. For me however, these are not so simple to meet.

  • A $2000 daily minimum is just nuts. Some days I will have that much, but not every day.
  • I get paid via checks, direct deposit is not an option.
  • I do not do much shopping and when I do I prefer to use either my Bank of America credit card for it's rewards or plain cash.

Until recently I would just try to ensure I always got in at least the 10 transactions. Typically this would mean making a few small purchases near the end of the month with my debit card just to get the transaction. This meant spending money I did not really want to spend.

I would occasionally miss a few months but so far it seems wells fargo has waived the fee anyway. I'm not sure if they have some sort of forgiveness policy or what. If they do that's great but I'd rather not rely on that being a thing forever.

How I am avoiding the fee

For the last couple of months I've been trying a new method of avoiding the fee while not having to spend money on small stuff I don't need. The downside is it ties up about $800 each month. The plus side is I can actually gain a little money each month.

A few years ago I came across Treasury Direct.gov. They allow you to invest in treasury bills, notes, savings bonds, etc on your own rather than having to go through some financial institution.

The way it works is you link your bank account with them and then create a purchase request. The money will be withdrawn via direct debit from your account and when the security matures it can be direct deposited back into your account.

I messed with it a few times, investing in some notes and bills but then stopped because the return was not great and some life changes meant I could no longer afford to be tying up large sums of money for long periods of time.

In August last year one of my prior long-term note investments matured so I had an extra $1000. Around the same time I was doing my typical buy small things to avoid the fee and I got to thinking.

One of the securities available for purchase is a 4-week bill, just perfect for this situation. Each month I could submit a purchase request for $800 worth of 4-week bills. After the four weeks are up they would direct-deposit the $800 back into my account and allow me to meet that requirement, and I might even gain a little since the actual purchase price is generally less than the security value.

When buying a security they offer different ways to redeem it once it matures. For this to work you must choose to deposit it back into your checking account. If you put it in a Zero-percent C of I or try and schedule re-investments it will not work.

Because I had just receive back my prior investment I had the spare cash available to start doing this without affecting my day-to-day finances. Having the money tied up is also not a big concern for me. If I do end up needing the money I can simply not re-invest it when it matures. Worst case scenario I find out I need the money right after it gets invested and I have to wait a full month. I have enough savings / credit that that should not be a problem.

So I've been doing this for a few months now and so far results have been pleasing. I've successfully avoided the fee each month and gained a tiny amount of money. The gains may not be spectacular but I figure it is better than spending money.

Month Purchase Price Net gain Fee waived
December 2016 $799.81 $0.19 Yep
January 2017 $799.70 $0.30 Yep
February 2017 $799.70 $0.30 Yep
March 2017 $799.75 $0.25 Yep
April 2017 $799.54 $0.46 Yep
May 2017 $799.55 $0.45 Yep
June 2017 $799.48 $0.52 Yep
July 2017 $799.41 $0.59 Yep

They note on the website that it's theoretically possible one may actually loose money on these investments, just like any other investment. I've never seen that happen in the short time I've been using the service. There have been some months where I have no gain (due to rounding) but never a loss. The price per $100 for example might end up being something like $99.9993152 so the purchase price ends up being $800 after rounding resulting in simply breaking even.