Canada has introduced new federal rules that limit how much banks charge when customers lack funds to cover payments, a move Ottawa says will save Canadians hundreds of millions each year.
Under the new regulations, which took effect Thursday, non sufficient funds fees for personal deposit accounts now face a maximum charge of $10. Previously, financial institutions charged NSF fees reaching $50 for failed transactions such as bounced cheques or rejected pre authorized payments.
The rules also prevent banks from applying more than one NSF fee within two business days for the same account. Banks also face a ban on charging the fee when the account shortfall stands below $10.
The federal government introduced the cap after concerns grew about the impact of high banking fees on financially vulnerable households. Officials estimate the new limit will save Canadians more than $600 million annually.
Advocacy groups welcomed the policy shift. ACORN Canada, a national organization representing low and moderate income families, called the reforms a “major win” for its members “who have long been gouged by fees.”
“These changes will directly benefit millions of Canadians — especially renters, single parents, gig workers, and people living paycheque to paycheque — by preventing fees from spiralling into deeper financial hardship,” the organization said in a news release.
High NSF charges have drawn criticism in recent years. In one example, a class action lawsuit against TD Bank Group settled in 2024 after a customer faced a $96 fee for being 45 cents short on a PayPal bill when the merchant attempted the transaction twice.
Debit card purchases rarely trigger NSF fees because banks typically reject the transaction when funds fall short.
The Canadian Bankers Association has said such fees encourage responsible account management. The industry group advises customers to monitor balances, set alerts, or use overdraft protection to avoid penalties.
The federal government expects the new rules to reduce excessive charges while offering greater protection for Canadians managing tight budgets.
