Based on coverage from The Globe and Mail, Barchart, Daily Hive, Mirage News, and National Observer.
Canadians who’ve ever had a bill bounce by a few dollars just got some real relief: new federal rules now cap non-sufficient funds (NSF) fees at $10 for personal deposit accounts. The changes took effect Thursday, March 12, and Ottawa says they could save Canadians more than $600 million a year.
NSF fees apply when a cheque or pre-authorized debit is declined because there isn’t enough money in the account and the customer doesn’t have overdraft protection.
Canada caps NSF fees at $10
The new rules limit what federally regulated banks can charge when there’s not enough money to cover a cheque or pre-authorized debit.
Key protections now in force: - A maximum NSF fee of $10 on personal deposit accounts (Ottawa says these fees previously could reach $50) - No more than one NSF fee per account within a two-business-day period - No NSF fee if the account shortfall is under $10
The federal government framed this as a consumer affordability move. Finance Minister François-Philippe Champagne said that if someone is just $5 short, they could previously be hit with an NSF fee as high as $50, money that could otherwise go to essentials like groceries or medicine.
Who pays NSF fees in Canada
Consumer advocates have long argued NSF fees land hardest on people who have the least wiggle room, including low-income Canadians and those with poor credit histories.
ACORN Canada, which represents low- and moderate-income families, called the new rules a “major win” and said the changes should help “renters, single parents, gig workers, and people living paycheque to paycheque” by stopping fees from piling on and pushing people deeper into financial trouble.
The Financial Consumer Agency of Canada (FCAC) also points out that, before this cap, fees could be charged regardless of how small the shortfall was, and could stack up quickly if multiple payments were declined in a short time.
Why small shortfalls became expensive
One of the clearest examples of how harsh NSF fees can get showed up in a class-action lawsuit against TD Bank Group that was settled in 2024. The lead plaintiff had been charged $96 for being 45 cents short on a PayPal bill after the merchant attempted the charge twice.
That kind of situation is exactly what the two-business-day limit is meant to curb, at least on a single personal deposit account.
One thing that hasn’t changed: debit purchases typically aren’t hit with NSF fees, because they’re generally declined immediately if the money isn’t there.
Banks and fintechs weigh in
The Canadian Bankers Association has previously defended NSF fees as a way to encourage responsible banking behaviour, and said customers can avoid them by monitoring balances, setting balance alerts, or considering overdraft protection.
As Canadians adjust to the new NSF fee cap, many may also be looking for ways to save on household expenses this winter; practical tips can be found in our article on budget-friendly hacks to keep your home warm.
Daniel Eberhard, founder and CEO of Koho Financial Inc., praised the cap but argued it also points to a bigger issue: limited competition in Canada’s financial services sector. “There is no reason that these fees need to be what they are,” he said, adding that for people getting hit with $100 to $200 a month in fees, it matters.
In comments reported by Daily Hive, Eberhard also described the cap as an important “band-aid,” while warning banks may look for other ways to make up lost revenue. He added that high NSF-style fees can also show up outside traditional banking, such as with auto lenders and payday lenders, citing amounts of $100 to $200.
FCAC oversight and what happens next
FCAC will oversee compliance with the new NSF fee requirements. The practical takeaway for most people is straightforward: if a cheque or pre-authorized payment bounces on a personal deposit account at a federally regulated bank, the fee should now be capped at $10, it shouldn’t repeat more than once within two business days on the same account, and it can’t be charged at all if the shortfall is under $10.
For Canadians who routinely live close to zero between paycheques, that’s not a full fix for affordability, but it does shrink one of the most punishing “gotcha” fees in everyday banking.
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