One in three Canadians gets hit with non-sufficient funds fees every year. Banks used to charge $45–$48 per bounced cheque, but new regulations cap NSF fees at $10. Here's what changed, what it means for Canadian banks and consumers, and how consumers can avoid these costs.
Banks used to charge $45–$48 when your account couldn't cover a debit. As of March 12, 2026, regulations limit banks to $10, restrict banks to only one NSF fee per two business days, and block banks from charging for overdrafts under $10. Consumers save over $600 million a year.
Key Takeaways
- A new $10 cap on non-sufficient funds NSF fees took effect on March 12, 2026. Your bank can no longer charge more than $10 when your account is short, from $45–$48 at most banks.
- Banks collected fees on 15.8 million NSF transactions in 2023. The new rules are expected to save consumers over $600 million a year in banking fees, with banks losing $619 million in NSF fee revenue.
- Merchant fees ($20–$40) still apply on top. The cap only covers the non-sufficient funds fee that banks charge — not what your landlord or utility company charges for a dishonoured cheque.
- Bree offers up to $750 with no interest and no credit check. Instead of waiting for banks to reject your cheque, a cash advance from Bree can prevent charges, overdraft fees, and the costs that follow.
What Are NSF Fees?
A non-sufficient funds fee is what banks charge when your account lacks sufficient funds for a cheque or pre-authorized debit. The bank rejects the debit and charges a fee. Before the new rules, banks charged $45–$48 per NSF transaction.
According to the Department of Finance Canada, over one in three Canadians incur NSF fees in any given year. Government data show that consumers who face these fees tend to have low incomes or be in financial difficulty.
Banks do not charge NSF fees on debit card taps or e-transfers — those simply decline. Banks charge NSF fees only on cheques, pre-authorized debits, and bill payments processed through the clearing system.
How Much Did Banks Charge for NSF Fees?
Before the change, banks charged between $45 and $48 every time a debit bounced. Here's what the big six banks charged per non-sufficient funds NSF transaction, according to the Canada Gazette:
Banks charged these fees per NSF transaction — not per day. If three debits bounced at banks on the same day, the costs could reach $135–$144.
Government data shows banks collected NSF fee revenue from 15.8 million transactions in 2023 alone. The six large banks accounted for 97 percent of all service charges on deposit accounts — $6.8 billion across retail and commercial deposit accounts. National Bank and the other large banks collected the vast majority of NSF fees and NSF fee revenue.
Banks also charge overdraft fees when your balance dips below zero with overdraft protection turned on. Overdraft fees at banks typically include a monthly charge plus borrowing costs on the overdrawn amount. Without overdraft protection, banks charge you the NSF fee instead.
What Changed on March 12, 2026?
The federal government passed regulations under the Bank Act to protect consumers and limit what banks charge for bounced transactions. The new rules include three changes:
1. Banks can charge no more than $10 in NSF fees. Financial institutions — including banks and federal credit unions — must cap NSF fees at $10 when a personal deposit account has insufficient funds. That's an 80 percent drop from what banks charged in the past.
2. Banks can charge only one NSF fee per two-business-day period. Banks cannot charge a second fee on the same personal deposit account during that period. Banks track personal deposit accounts to ensure fees aren't stacked. This stops the pattern where banks charged fees on multiple bounced debits in a single day.
3. Banks cannot charge on small overdrafts. If your account is overdrawn by less than $10, banks cannot charge a fee. Before the change, banks could charge $48 when consumers were just $3 short.
These regulations apply to 79 federally regulated financial institutions — including large banks, smaller banks, authorized foreign banks, and federal credit unions. The FCAC oversees compliance at banks and other financial institutions.
What the New Rules Don't Address
The limits only apply to personal deposit accounts at banks and federal credit unions. They do not apply to:
- Business accounts — banks can still charge higher fees on business accounts
- Provincial credit unions — many banks and credit unions are regulated at the provincial level, not federally. Consumers who bank with provincial credit unions should check their fee schedules.
- Merchant fees — when your cheque bounces, the recipient can charge you $20–$40 on top of what banks charge. These merchant fees aren't regulated under the Bank Act.
Even with the new limits, a single bounce can cost $30–$50: the $10 that banks charge plus the merchant's dishonoured cheque fee.
NSF Fee Revenue: How Much Did Banks Earn?
The statistics paint a clear picture of how profitable bounced transactions were for banks. At $45–$48 per NSF transaction across 15.8 million transactions, banks were collecting an estimated $710–$760 million per year in NSF fee revenue from bank customers with insufficient funds. Banks are expected to lose $619 million in NSF revenue in 2026 as the regulations take effect.
National Bank, along with BMO, Scotiabank, TD, CIBC, and RBC, accounted for nearly all NSF revenue across banks. This NSF revenue and NSF fee revenue from bounced debits was a reliable income stream — one that banks fought to protect during government consultations.
Smaller banks, foreign banks, and federal credit unions also charge NSF fees, though they represent a small fraction of total NSF fee revenue. Provincial credit unions set their own limits on fees. In total, 79 banks and financial institutions must follow the new rules.
For comparison, California banned NSF fees on instantly declined transactions in January 2025 through AB 2017. In Canada, the government data shows that two-thirds of the most financially vulnerable Canadians — those in the "struggling a lot" category — run short of money for regular expenses, making them the most likely to face fees from banks.
The FCAC plans to publish a full report on all fees that banks charge later in 2026. Consumer advocates are watching to protect consumers from any fee shuffling by banks.
Who Gets Hit With NSF Fees the Most?
According to FCAC and Canada Gazette data, 34 percent of Canadians incur NSF fees every year. Another 26 percent of consumers are struggling financially, and 25 percent spend more than their monthly income.
Low-income Canadians and low-income individuals bear the highest costs. Women, female lone-parent families, recent immigrants, and Indigenous peoples are overrepresented among those who face insufficient funds for NSF fees at banks. Young Canadians (18–34) and gig workers are more likely to use cheques — the payment method most likely to incur bank fees.
The data is striking: at an NSF fee of $48, someone who bounced 10–20 transactions in a year could lose $480 to $960 — enough to pay for a month of groceries. The government also noted in its analysis that consumers in financial difficulty "may resort to taking out a high-cost or predatory loan" to avoid fees at banks. That's the cycle: consumers are short on funds, a cheque bounces at banks, they get charged, and now they're even shorter on money.
NSF Fees vs. Overdraft Fees at Banks
Banks charge NSF fees when they reject a debit. Banks charge overdraft fees when they allow a transaction to go through on borrowed funds. With overdraft protection, banks let the cheque clear and charge borrowing costs. Without it, banks bounce the cheque and charge fees instead.
Key differences for bank customers: NSF fees are now capped at $10, but overdraft fees remain uncapped. Overdraft protection at banks requires a credit check, so many bank customers with low credit scores can't get it. Some bank customers incur both overdraft fees on certain transactions and NSF charges on others when they exceed their overdraft limits.
How Much Will Canadians Save?
The Department of Finance Canada estimates that consumers save more than $600 million every year. The cooling period and the under-$10 overdraft rule are expected to eliminate about 1.9 million transactions in the first year alone.
On the finance side, NSF fee revenue at banks will drop by $619 million in 2026. Over ten years, the government expects $4.1 billion in savings for consumers against $4.0 billion in costs to banks and financial institutions.
Since December 2025, banks have also committed to offering accounts at no more than $4 per month alongside other steps to lower banking fees for consumers. ACORN Canada and other advocacy groups pushed banks during government consultations to lower what banks charge. ACORN Canada argued that fees at banks were excessive compared to what it actually costs banks to cover a bounced cheque.
How Can Consumers Avoid NSF Fees at Banks?
Even at $10, NSF fees at banks add up — especially when merchant fees stack on top. Here are ways to protect yourself:
Set up account alerts. Regulations require banks to alert consumers when their balance drops below $100. Adjust this threshold at your bank for more warning.
Track pre-authorized debits. Know when rent and subscription payment dates fall. If government benefits don't land until the end of the month but debits come mid-month, that timing gap at banks causes bounces.
Ask banks about overdraft. If consumers qualify, overdraft limits at banks cost less than repeated NSF fees, though banks still charge overdraft fees on their overdraft accounts. Overdraft fees at banks remain uncapped by the overdraft regulations.
Switch banks. Some banks decline debit instead of charging fees. Federal credit unions and digital banks offer accounts with $0 NSF fees.
Use Bree to bridge the gap. If your account is running low, Bree advances you up to $750 with no interest and no credit check. Government benefits qualify as income, and you get up to 90 days to pay. That beats any fee banks charge — plus consumers avoid merchant fees and stress.
Do the new rules apply to credit unions?
The $10 limit applies to federal credit unions — the three credit unions regulated under the Bank Act. Most credit unions in Canada are provincially regulated and are not bound by what banks must follow. Provincial credit unions may still charge NSF fees above $10. Consumers should check with their credit unions or banks directly about current fee schedules.
Can banks still charge NSF fees on the same day?
No. Banks can only charge one NSF fee per two-business-day period on the same personal deposit account. If two cheques bounce on Monday, banks only charge consumers once during that two-day period. Banks cannot charge another fee until Wednesday at the earliest — a full two business days later. This protects Canadians from the old pattern where banks could charge $100+ from a single bad day.
What if I don't have enough money before my benefits arrive?
Don't wait for a cheque to bounce at banks. Even at $10, you still face the fees that banks charge, plus merchant fees of $20–$40 on top. A Bree cash advance gives consumers up to $750 with no fees and no credit check — enough money to cover rent or expenses before they bounce at banks.
Avoid NSF Fees Before Banks Charge You
The $10 limit on NSF fees is a real win for Canadians. But these limits don't apply to merchant fees, don't apply to all credit unions, and don't prevent the cheque from bouncing at banks in the first place.
That's where Bree comes in. Instead of letting banks charge consumers after a debit fails, get the cash before it happens. Up to $750, no fees, no credit check, and up to 90 days. Government benefits qualify as income. Sign up with Bree in minutes.
Sources
Join our newsletter to get the latest updates
.png)
.png)
