New rules are now in effect limiting the amount that banks can charge customers who don’t have enough money in their accounts to cover a cheque or other pre-authorized charge.

Canada’s new cap on non-sufficient funds fees is set at $10 for personal deposit accounts.

The changes, announced by Ottawa last year and which kicked in on Thursday, also prohibit banks from charging more than one NSF fee in a period of two business days for the same deposit account, and ban charging an NSF fee when an account shortfall is under $10.

The federal government has said that until now, NSF fees could be as high as $50.

Advocates have said the charge disproportionately affected low-income Canadians and people with poor credit history.

The new cap is expected to save Canadians more than $600 million annually.

ACORN Canada, a national organization for low- and moderate-income families, celebrated the new rules, calling it a “major win” for its members “who have long been gouged by fees.”

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“These changes will directly benefit millions of Canadians — especially renters, single parents, gig workers, and people living paycheque to paycheque — by preventing fees from spiralling into deeper financial hardship,” the organization said in a news release.

Bank customers have sometimes seen high NSF charges for being only pennies short. In a class-action lawsuit against TD Bank Group settled in 2024, the lead plaintiff had been charged $96 for being 45 cents short on a PayPal bill after the merchant tried to put the purchase through twice.

Debit purchases aren’t generally subject to the fee because such transactions are rejected if there isn’t enough money in the account.

The Canadian Bankers Association has previously said the fees encourage responsible banking behaviour, and that customers can avoid such charges by regularly monitoring their account balances, setting up balance alerts, and considering overdraft protection services.

Daniel Eberhard, founder and CEO of Koho Financial Inc., praised the changes but said they highlight the need for more competition in the financial services sector.

“There is no reason that these fees need to be what they are,” he said.

“Half this country’s living paycheque to paycheque. If you’re somebody getting dinged often $100, $200 a month, that matters.”

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