Canadian banks capping certain hefty fees for customers

People in Canada soon won't have to worry about being charged a hefty bank fee for having insufficient funds in their account.

This month, the federal government is implementing a cap on the fee that Canadian banks can charge for non-sufficient funds (NSF).

Banks charge NSF fees when a cheque or pre-authorized debit (PAD) payment is declined due to insufficient funds, and the customer doesn't have overdraft protection. Those fees typically range from $45 to $48, so the cost can add up.

Starting on March 12, you cannot be charged more than $10 in Canada if you don’t have enough money in your personal deposit account to cover a payment to be drawn from that bank account.

"These fees disproportionately impact the financial well-being of low-income Canadians who do not have access to overdraft protection and can perpetuate debt cycles by reducing the amount of available funds with which a consumer could pay their bills," reads a government notice from March 2025.

In addition to the $10 cap, Canada will only allow a bank to charge one NSF fee per account over two business days.

"If a consumer has two accounts at the same bank, or two accounts across different banks, an NSF fee may be imposed within the two-business-day period if it is incurred on a different account from the first NSF fee in that period," explained the notice.

The new rules will also prevent Canadian banks from charging an NSF fee when the account shortfall is under $10.

"Should a consumer have insufficient funds to make a payment, but the overdrawn amount falls within this range, the payment could still be declined, but banks will not be permitted to impose an NSF fee under that circumstance," stated the government.

According to the notice, barring NSF fees on nominal amounts helps protect consumers from being penalized over small errors or miscalculations, providing relief from NSF fees on very small amounts overdrawn.

According to the Credit Counselling Society, this new $10 cap on NSF fees could save Canadians $600 million a year.