What are the rules and key terms for bank fees and overdrafts in Canada?

By FastBuySale Newsroom · 5 Nov 2026 · 23m ago

Key terms: account fees and fee packages

Bank fees and overdrafts in Canada follow a few clear rules. Since March 2026, federally regulated banks can charge no more than $10 in non-sufficient funds (NSF) fees on a personal deposit account, can't charge an NSF fee more than once in two business days, and can't charge one when the shortfall is under $10. Overdraft protection is a separate, approved form of short-term credit: you usually pay about $5 a month or $5 per use, plus interest on the overdrawn amount.

Those figures come from the Financial Consumer Agency of Canada (FCAC), the federal regulator for banking consumer protection. Its consumer pages and its Review of banking fees in Canada explain how monthly account fees, NSF fees, overdraft protection and courtesy fees work, and how to lower what you pay.

Chequing account: the FCAC describes it as the account you use for everyday transactions, such as depositing your pay, paying bills, debit purchases, ATM withdrawals and transfers. Chequing accounts usually don't earn interest.

Teller-assisted vs self-serve transactions: teller-assisted transactions are done with a bank employee, usually in a branch. Self-serve ones include ATM withdrawals and deposits, cheques, pre-authorized debits, debit purchases and online or phone transfers. The FCAC warns that phone transactions with an agent may count as teller-assisted, so check how your institution classifies them.

Monthly fee package: you pay a set amount each month, which usually includes a certain number and type of transactions. Go over that and you pay extra for additional transactions.

Pay-as-you-go account: you pay a fee each time you make a transaction. The FCAC notes these fees can add up quickly, so count your monthly transactions first.

Minimum balance waiver: some accounts waive the monthly fee if you keep a minimum balance. The FCAC's example is a $12-a-month account waived with a $2,000 minimum balance, which could save $144 a year. But it also warns that if your balance drops to $1,900 because of a $100 payment, you pay the $12 that month, even if the balance dipped for only one day.

Low-cost and no-cost accounts: some institutions have an agreement with the federal government to offer basic accounts. A low-cost account has a monthly fee of $4 or less; a no-cost account has the same features with no monthly fee.

Fee changes: a financial institution may change service fees at any time, but federally regulated institutions must tell you in advance if they raise existing fees or add new ones, and must give you a list of all service charges on your account. If they didn't tell you, you may file a complaint.

NSF fees: the new $10 cap

An NSF fee is charged when a transaction such as a cheque, pre-authorized debit or bill payment is declined because the account has no overdraft protection and not enough money to cover it.

Under the Financial Consumer Protection Framework Regulations, in force since March 2026, NSF fees charged by banks on personal deposit accounts must be capped at $10 and must not be applied if an NSF fee was charged in the previous two business days or if the shortfall is less than $10. This applies only to personal deposit accounts such as chequing and savings, not business accounts.

The two-business-day rule applies regardless of how many times a merchant or payee tries to process the same payment. Before the change, the FCAC says Canadian banks charged roughly $45 to $48 per occurrence, and some charged a new fee every time a payment was retried.

The FCAC estimates NSF fees exceeded $1 billion in charges in 2025, the largest consumer cost among the account fees it collected data on.

Dishonoured-payment fees are separate. The business you were paying, such as a utility, landlord or lender, may charge its own fee for a failed payment, typically $20 to $40. These are capped at $25 for federal government departments and at $20 for payday lenders, and Quebec generally limits them to the actual bank charges the payee pays.

Most fintechs, the FCAC notes, don't charge NSF fees; they simply decline the transaction.

Overdraft protection: fees, interest and options

Overdraft protection is short-term credit that lets a transaction go through when you don't have enough money. You must be approved for it, and you repay the overdrawn amount with interest and fees.

Monthly plan: a flat fee, usually about $5, covering any number of overdrafts that month. Most institutions charge it every month even if you don't go into overdraft, though some waive it in months you don't use it.

Pay-per-use: a set fee each time you go into overdraft, generally a maximum of $5. Some institutions charge it only once per business day. If you often go into overdraft, the FCAC says this option can be costly.

Linked-account protection: money moves automatically from a linked savings account or line of credit, typically for a $5 fee per transfer.

Interest: the FCAC says Canada's banks charge an annual rate of about 19% to 22% on overdrawn amounts, calculated daily and charged monthly, and most require the balance to be repaid within a set period, for example 89 days. Overdraft fees count as interest under the Criminal Code's 35% criminal interest rate, which the FCAC says effectively caps overdraft fees at $5.

Courtesy fee: if you have no overdraft protection, some institutions may let a transaction through for a small courtesy, ad-hoc or casual overdraft fee, usually only the first time. Next time you may get an NSF fee instead.

Some institutions won't charge overdraft fees if your account includes protection at no extra cost, you go over by a small amount such as $5 or less, or you repay the overdraft before the end of the day.

Worked example and how to pay less

The FCAC's example: Nadine has $30 in her account when a $50 phone bill and later a $495 vehicle payment are due, with two $500 paycheques coming. With no overdraft protection, both payments are declined and she pays $80 in total fees (two $10 NSF fees and two $30 merchant fees). With a $5 monthly plan at 22% interest she pays $5 in fees plus $0.11 interest. With pay-per-use she pays $10 plus $0.15 interest.

The lesson, in the FCAC's words: for people who occasionally incur NSF fees, overdraft protection may be a lower-cost option. If you overdraw often, it can become expensive, so look at your patterns first.

Use low-balance alerts. For personal deposit accounts, banks must send an electronic alert when your balance falls below $100, or a threshold you set, explaining what you can do to avoid fees and how long you have to act.

Other FCAC tips: keep the minimum balance if your package waives fees; stay within your included transactions; use self-serve and online banking; use your own institution's ATMs; ask for cash back at stores that offer it free; and keep enough money in your account for bills and cheques.

Ask about discounts for youth, seniors, newcomers, students and people living with a disability, or for holding other products with the same institution. The FCAC's Account Comparison Tool lets you compare chequing and savings accounts.

If an overdraft has spilled onto a credit card, plan the payoff with our and see how small fees compound over years with our

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