Federal cap limits non-sufficient funds bank fees to $10 starting Thursday

New federal rules limiting how much banks can charge when customers do not have enough money in their accounts to cover a cheque or pre-authorized payment took effect Thursday.

The regulations cap non-sufficient funds (NSF) fees at $10 for personal deposit accounts. According to the federal government, banks previously charged as much as $50 for the same type of transaction.

Under the new rules, banks are also prohibited from charging more than one NSF fee within two business days for the same deposit account. Financial institutions also cannot charge an NSF fee if the account shortfall is less than $10.

The federal government said the changes are expected to save Canadians more than $600 million annually.

Advocacy group ACORN Canada said the new limit will reduce financial pressure on households that regularly face banking penalties. In a statement, the organization said the rules represent a “major win” for low- and moderate-income members who have pushed for limits on the fees.

Bank customers have previously reported being charged large NSF penalties for small shortfalls. In a class-action lawsuit settled in 2024 involving TD Bank Group, a lead plaintiff was charged $96 after being 45 cents short on a PayPal payment when the merchant attempted the charge twice.

Debit card purchases typically do not trigger NSF fees because the transaction is declined if there is insufficient money in the account.