New regulations that will cap non-sufficient funds (NSF) fees at $10 will save Canadians $4.1 billion over the next decade, according to the federal government.
Effective Thursday, Canadian banks won’t be allowed to charge more than $10 when someone doesn’t have enough money to cover a pre-authorized payment or cheque.
Right now, banks are allowed to charge up to $48 for an NSF fee. Banks will also no longer be able to charge more than one NSF fee within two business days, and they cannot charge an NSF fee if an account is short by less than $10.
Just over a third of Canadians incur an NSF fee in a given year; an estimated total of 16.1 million NSF transactions occurred in 2025 (corresponding to an NSF fee revenue of $753 million), according to the Department of Finance.
Acorn Canada, a community union of low- and moderate-income people, said that works out to $410 million a year, which could cover yearly grocery expenses for nearly 27,000 four-person families.
“We consider this a win,” said Acorn Canada president Alejandra Ruiz Vargas, adding that Canadians with low to moderate income have lost a lot of money to NSF fees as the costs of rent and groceries have increased. “When you don’t have the money and then on top of that, you receive an NSF fee when maybe you only needed 80 cents — that’s predatory,” Ruiz Vargas said.
The Big Five banks of Canada currently charge between $45 and $48 for NSF fees, an amount that Clay Jarvis, NerdWallet Canada’s banking expert, called “obscene.”
Saving $38 on a bounced payment is a “ginormous” difference for those who don’t have very much, said Mark Kalinowski, corporate and community relations manager at the Credit Counselling Society. “What we see are Canadians who are living threadbare,” he added. “That $38 doesn’t sound like a lot of money, but to some people, it seems like an unsurmountable mountain to pass.”
Banks no longer being allowed to charge multiple NSF fees within two business days will also make a difference for a lot of Canadians. Kalinowski pointed out that people don’t usually just get hit with one NSF at a time — they often get five or six. “Most of us set up our lives so that money comes out of our accounts as money comes in,” he said. “It’s possible that the car payment, the car insurance, the utility bill, and the cellphone bill are all set to come out at the same time. And if I’m short on one, all of a sudden, I’m short on all of them.”
Having to pay NSF fees multiple times a year can be a huge drag on a small family income, Jarvis said. “I think most Canadians would agree that the fees that we pay our banks sometimes seem a little unfair and when you can take away a fee that penalizes people for simply not having money, that’s definitely a step in the right direction.”
The government initially considered an additional regulation requiring banks to send alerts for incoming NSF fees followed by a three-hour grace period to allow consumers to deposit funds and avoid NSF fees altogether. However, after industry groups argued that the system would require significant investment and 12 to 18 months to implement, it was removed from the regulations.
“Banks are focused on providing clients with value and trusted advice to help them reach their financial goals and encourage clients to speak with them about options that may help minimize or avoid fees,” the Canadian Bankers Association said in a statement. “We encourage Canadians to regularly monitor their account balances, set up balance alerts, and consider overdraft protection services to avoid paying NSF fees.”
Canadians can avoid NSF fees with overdraft protection, which covers a transaction when you don’t have enough money in your account to cover a payment or withdrawal. Banks often charge a monthly flat fee or pay-per-use fee for these transactions, alongside daily interest on the negative balance.
“If you come up short on a payment and have overdraft protection, at least that bill is getting paid,” Jarvis said. On the other hand, he said, you’ll probably be charged over 20 per cent interest annually on whatever money the bank provides, “so it’s a bit of a double-edged sword.”
Kalinowski said it would be ideal if the banks reached out to consumers to let them know NSF fees are coming out. “When it’s a reoccurring issue, it would be nice if someone would step up and say, ‘What is the issue? How can we help you move beyond this?’ ”
Ruiz Vargas said that even though Acorn fought to do away with NSF fees altogether, the $10 cap is “a breath of fresh air.”
This is a developing story.
