What to know
- Federally-regulated banks can now charge no more than $10 when a payment is declined due to insufficient funds.
- Banks cannot apply more than one NSF fee within two business days for the same account.
- Customers won’t be charged an NSF fee if their account is overdrawn by less than $10.
New federal regulations limiting the cost of non-sufficient funds (NSF) fees took effect Thursday, reducing how much federally-regulated banks can charge Canadians when payments bounce due to insufficient funds.
Under the new rules, banks can no longer charge more than $10 for an NSF fee on personal deposit accounts.
The regulations also prevent banks from charging the fee more than once within a two-business-day period on the same account and prohibit fees when an overdraft is less than $10.
The changes aim to reduce banking costs for Canadians, particularly those who may already be facing financial strain.
Previously, NSF fees often ranged from roughly $45 to $48 and could be charged multiple times if several payments were declined.
“Even if someone is just $5 short when paying a bill or covering a cheque, they can be hit with a non-sufficient funds fee as high as $50. That’s money that could otherwise go toward groceries, medicine, or other everyday essentials. And this isn’t uncommon; more than one in three Canadians are affected by these fees,” Finance Minister François-Philippe Champagne said in a news release.
“By capping NSF fees at $10 and strengthening consumer protections, we’re helping Canadians keep more of their hard-earned money while making everyday banking fairer and more affordable.”
The Financial Consumer Agency of Canada will monitor banks to ensure they comply with the new requirements and protect consumers’ rights under the updated regulations.
