Keeping your financial accounts inactive or dormant could cost you money.
Whether it is a chequing account, investment account, PayPal, credit card, or even a gift card, an inactivity fee may apply if you are not using it. Or, in the case of a self-directed investment account, when you are not trading enough.
I hate paying fees of all kinds and consider a dormancy fee the worst of insults. It is like the bank is giving you the middle finger. You will either spend of your own volition or be compelled to do so!
Read on to learn about inactivity fees to watch out for in Canada.
Bank Account Dormancy Fees in Canada
A bank account usually becomes dormant after 2 years of inactivity, resulting in a dormancy fee or inactivity fee.
You may get a notice from the bank asking you to reactivate the account after 2, 5, and 9 years of dormancy. After 10 years of inactivity, funds in your account are transferred to the Bank of Canada (BoC).
The BoC holds unclaimed balances of less than $1,000 CAD for 30 years and balances exceeding $1,000 for 100 years.
You can search for unclaimed bank balances using this tool.
The table below shows the dormancy fees charged by Canadian banks.
|RBC||2-8 years: $20; 9th year: $40|
|CIBC||2-4 years: $20; 5-8 years: $30; 9th year: $40|
|BMO||2 years: $20; 5 years: $30; 9th year: $40|
|Scotiabank||2-4 years: $20; 5-8 years: $30; 9th year: $40|
|Tangerine||1 year: $10; 2-9 years: $20; 10 years: $40|
|Simplii Financial||1 year: $10; 2-9 years: $20;|
|National Bank||1 year: $20; 2 years: $30; 3-5 years: $40; 6-7 years: $50; 8-9 years: $60|
|LBC Digital||2-9 years: $25; 10 years: $40|
|Desjardins||Quebec (1 year: $15, 2 years: $30, 3 years: $50); Ontario (2-4 years: $15, 5-8 years: $30; 9 years: $50)|
|Laurentian Bank||1 year: $15; 2-4 years: $30; 5-8 years: $40; 9th year: $45|
|Manulife Bank||2, 5, 9, years: $20|
|motusbank||$30 per year|
If your account balance is less than the inactivity fee, your remaining balance is deducted, and the account is closed.
Inactivity Fees For Investment Accounts in Canada
Many brokerage firms charge an inactivity fee or “account maintenance fee” when you have a low balance or do not complete a minimum number of trades each quarter.
|Brokerage Account||Inactivity Fee|
|TD Direct Investing||$25/quarter if balance is less than $15,000|
|RBC Direct Investing||$25/quarter if combined assets are less than $15,000|
|BMO InvestorLine||$25/quarter if balance is less than $15,000|
|Scotia iTrade||$100/year if balance is less than $25,000|
|CIBC Investor’s Edge||$100/year if balance is less than $10,000|
|Wealthsimple Trade||$0 (None)|
|National Bank Direct Brokerage||$100/year if assets less than $20,000|
|Disnat||$30/quarter if value of portfolio is less than $15,000|
|Qtrade||$25/quarter if assets less than $25,000|
|HSBC InvestDirect||$25/quarter if assets less than $25,000|
|CI Direct Trading||$24.95/quarter if assets lower than $5,000|
Inactivity fees may be waived if you complete a minimum number of commissionable trades each quarter or if you are a young investor (30 years or under).
PayPal Inactivity Fees in Canada
PayPal introduced inactivity fees starting in 2021.
If you have not conducted any transactions for 12 months, a $20 inactivity is charged to your account.
If your balance is lower than $20, the full balance is withdrawn.
Inactivity Fees For Credit Cards and Gift Cards
Inactivity or dormancy fees for credit cards are no longer common. That said, you should check your card agreement to see whether they are applicable.
Most gift cards are not allowed to expire or charge fees that lower their value over time.
Check your provincial legislation to see which rules apply:
- British Columbia
- New Brunswick
- Newfoundland and Labrador
- Nova Scotia
- Prince Edward Island
The three territories (Yukon, Nunavut, and Northwest Territories) do not have regulations specific to gift cards.
Loyalty cards, promotional cards, and prepaid credit cards may not be covered by the same rules as gift cards.
The KOHO Prepaid Mastercard has a $1.00 monthly inactivity fee when your account has been open for 13 months but inactive for 6 months.
How To Avoid inactivity Fees
You can avoid paying a dormancy fee for your bank account by making at least one transaction each year. For example, you could set up a recurring bill payment or subscription.
For investment accounts, you can trade a stock or two each quarter or increase your balance. Even better, you can sign up for a brokerage account with no inactivity fees.
For PayPal, inactivity fees can be avoided when you:
- Log in to your account
- Send money to friends or family
- Withdraw money from your account
- Pay with PayPal wherever it is accepted, or
- Donate to charity using PayPal