Canadian financial institutions will not be permitted to charge more than $10 in non-sufficient funds (NSF) fees after the government capped the charges.
NSF fees are charged by banks and financial institutions when there is not enough money in a customer’s account to cover a pre-authorized payment or cheque. The government has estimated NSF fees at Canadian banks typically range from $45 to $48.
The change will come into effect on March 12, 2026, according to a government brief.
The changes amend Canada’s Financial Consumer Protection Framework Regulations. They will also restrict financial institutions from charging an NSF fee more than once within two business days in relation to the same personal account or if the overdraft is less than $10.
The lower NSF fees will apply to personal accounts, not business ones.
The government says it expects the amendments will lead to a $4.1 billion drop in NSF fees over 10 years.
In a draft proposal from November 2024, it had included a requirement for banks to alert customers at least three hours before the NSF fee was charged. However, the government said it dropped this requirement as financial institutions indicated setting up such a system would be costly and take 12 to 18 months to implement.
The Department of Finance has estimated $15.8 million in NSF transactions occurred in 2023.
It also said about 34 percent of Canadians will face an NSF fee each year, with those likely to have low income or struggle with “financial commitments.”
The Canadian Bankers Association (CBA) said NSF fees encourage responsible banking behaviour. It said customers can avoid the fees by regularly checking their account balances, set up balance alerts, and have overdraft protection services.
CBA said that banks will comply by the start date.
The Finance Department said NSF fees largely harmed low-income Canadians and contributed to cycles of debt.
“Younger and lower income Canadians are experiencing missed payments on credit cards, auto loans, and lines of credit, signaling financial strain among these groups.” the Feb. 25 report said.
Canadians aged 26–35 have the highest debt delinquency rate at 2.24 percent, Equifax numbers show. Those aged 18–25 had a delinquency rate of 1.92 percent. Overall, in Canada, the delinquency rate was 1.53 percent.
A recent Ipsos report found that 43 percent of Canadians say they need help to get themselves out of debt.
A third of Canadians (36 percent) say they don’t know how to get out of debt or where to turn for help, which is up 6 percent from 2019, Ipsos said.
