NSF fees and overdraft protection in Canada: the new $10 cap and how overdraft costs work
Quick summary
A $10 cap on non-sufficient funds (NSF) fees started March 12, 2026 for federally regulated banks. The FCAC says these fees were typically $45 to $48 before. Overdraft protection is a separate product with its own fees and interest. Seebank fees in Canada.
Checked November 3, 2026. Main source: Finance Canada: new $10 cap on NSF fees (Mar. 11, 2026). See all 3 sources.
Key facts
- NSF fee cap
- $10, effective March 12, 2026, on personal deposit accounts at federally regulated banks
- Source: FCAC news release, Mar. 12, 2026
- Limit on repeats
- One NSF fee per two business days for the same account
- Source: FCAC news release, Mar. 12, 2026
- Before the cap
- NSF fees were typically $45 to $48
- Source: FCAC, modified Oct. 23, 2026
- Overdraft protection
- Usually about $5 a month or $5 per use, plus interest of about 21% or 22%
- Source: FCAC, modified Oct. 23, 2026
The $10 NSF fee cap
- Effective March 12, 2026. The announcement was on March 11, 2026.
- NSF fees are capped at $10. The FCAC says they were typically $45 to $48 before.
- You cannot be charged more than one NSF fee within two business days for the same deposit account.
- No NSF fee applies when the overdraft amount is under $10.
- The government expects savings of more than $600 million a year for Canadians, and the FCAC will monitor compliance.
The FCAC release says the cap applies to NSF fees that federally regulated banks charge on personal deposit accounts. The pages we read do not say it covers credit unions or business accounts, so ask yours. Before the rules, the FCAC says NSF fees were typically $45 to $48. Banks must also send an electronic alert when your balance falls below $100, unless you set a different amount.
Fees from the business you paid
The $10 cap does not stop the business you tried to pay from charging its own dishonoured payment fee. The FCAC says these are typically $20 to $40 per declined payment. Federal departments are capped at $25 and payday lenders at $20. In Quebec the fee is limited to the payee's actual bank charges.
Source: FCAC, NSF fees page, modified October 23, 2026.
How overdraft protection works
Overdraft protection can cover a transaction when your balance is below $0. There are two main kinds. Basic overdraft protection lends you money up to an approved limit. Linked products take money from a line of credit, HELOC, credit card cash advance or another account.
| Cost | What the FCAC says |
|---|---|
| Monthly fee | Usually about $5 a month, whether or not you use it. Some institutions waive it in months without an overdraft |
| Pay-per-use fee | Generally a maximum of $5 each time an overdraft increases. Some charge once per business day |
| Interest | Typically around 21% or 22% a year, charged daily |
| Courtesy fee | A small fee some institutions charge the first time. Repeats may trigger an NSF fee |
| Credit card cash advance | Usually a higher rate, with interest starting right away |
Source: FCAC, modified October 23, 2026.
The FCAC example
With a $200 balance, a $250 withdrawal leaves you $50 in overdraft (-$50). You repay that amount, plus fees and interest, from your next deposit.
Your rights
- The institution must get your express consent before adding overdraft protection.
- Your limit is not fixed. It can be lowered without notice depending on your agreement. Increases usually need your consent.
- You can ask for electronic alerts when your balance drops below a set amount.
- Cancelling usually needs written notice, and it does not erase what you owe.
- All joint account holders are responsible for repaying an overdraft.
How to avoid costly overdrafts
- Check whether your account already includes overdraft protection.
- Watch your balance, especially with pay-per-use or no protection.
- Look at past months to see how often you went negative and what it cost.
- If overdrafts are rare, pay-per-use may suit you. If they are frequent, a monthly fee option or a premium account may cost less.
- Set up balance alerts.
Questions people ask
What is the NSF fee cap in Canada?
$10, effective March 12, 2026, according to Finance Canada.
Can a bank charge me two NSF fees in a row?
Not more than one within two business days for the same deposit account, according to the release.
Is overdraft protection free?
No. The FCAC says there is usually a monthly fee of about $5 or a pay-per-use fee, plus interest of around 21% or 22%.
How old do I need to be?
The age of majority in your province: 18 in AB, SK, MB, ON, QC and PEI, and 19 elsewhere, according to the FCAC.