When paying a bill, if there’s not enough money in an account to cover the transaction, banks will often charge a Non-Sufficient Funds (NSF) charge.
The fees have been a major cause of frustration for some because even if an account is one dollar short, it could result in a $48 penalty.
But, a $10 dollar cap is coming on March 12, 2026.
“I think I’m not the only one dealing with this issue, which can be very expensive for many people,” said Elvira Townsend of Surrey, B.C.
Townsend told CTV News she always tries to pay her bills on time, but recently her bank balance dropped to minus nine dollars and she was immediately charged an NSF fee of $48, putting her account $57 in arrears.
“I was stressed out because I’m on disability and right now money is really tight, so I was like wow I have to come up with this,” she said.
Townsend said she applied for overdraft protection in the past, but her bank denied her because she has a low credit score.
“It’s very unfair and it’s very upsetting because I know there are a lot of people struggling,” Townsend said. “I’m struggling and that $48 - even if (it) was for minus one dollar - it’s a lot.”
Currently, Canada’s major banks charge $45 to $48 per NSF transaction and the charges have helped banks with profits since they were first implemented.
“These fees hit people who can least afford them, so families living paycheque to paycheque find it especially difficult,” said Tina Filion with the Credit Counselling Society.
Changes to the fees will be implemented March 12, 2026. There will be a $10 cap on NSF fees, meaning banks can’t charge more than one NSF fee within a two-business day period and there can be no NSF fee if an account is short by less than $10.
Filion said 34 per cent of Canadians are charged with at least one NSF fee each year.
“We’re talking about $600 million staying in people’s pockets, so it’s pretty huge,” she said.
“This is something positive, so people should celebrate this,” added Alejandra Ruiz Vargas, president of Acorn Canada.
Acorn is a group that advocates for low- and moderate-income people and has been fighting for NSF reforms.
Ruiz Vargas said while lowering NSF fees from $48 to $10 is a good start, Canadian banks should follow the lead of American banks where many have scrapped the fees altogether.
“This is good, very good, however, it’s not perfect, because as I mentioned it should be taken off completely, like they did in the U.S. They did it there and the banks there are still making a profit,” said Ruiz Vargas.
Townsend is hopeful more changes can be made to help her and others with lower incomes so they can become eligible for overdraft protection.
“I hope they can make changes to the rules and allow people like me to have overdraft protections which is important,” she said.
Correction
A previous version of this article stated banks cannot charge more than one non-sufficient funds fee within 72 hours and that they are required to alert customers before charging that fee. However, the latest regulations state banks are not required to notify customers of the NSF fee and that they cannot charge more than one NSF within a two-day period.
