New federal regulations have taken effect in Canada that cap the amount of fees charged for payments made when an account has insufficient funds—so-called NSF fees. From now on, federally regulated banks cannot charge more than 10 Canadian dollars for such transactions. Previously, such fees could reach $50. The new rules officially took effect on March 12, 2026.
New Restrictions for Banks
In addition to the new limit, the rules also introduce additional restrictions for banks. Specifically, a consumer cannot be charged an NSF fee more than once within two business days for the same deposit account. Additionally, the bank is not permitted to charge this fee if the account overdraft amount is less than $10. Compliance with the new requirements will be monitored by the Financial Consumer Agency of Canada.
Expected Impact on the Public
The federal government explains that the new rules are intended to reduce daily banking costs for the public, especially for people living paycheck to paycheck. According to estimates by the Canadian Ministry of Finance, limiting NSF fees will allow residents to save over $600 million annually. The ministry emphasizes that such fees disproportionately impacted financially vulnerable customers.
What happened before
According to the FCAC, before the new rules were introduced, the typical overdraft fee in Canada ranged from approximately $45 to $48. These fees could be charged regardless of how small the shortfall in the account was, and in some cases, multiple times in a row due to a series of declined payments. This was one of the reasons for revising the rules.
Legal Basis for the Changes
Legally, the changes are enshrined in the Regulations Amending the Financial Consumer Protection Framework Regulations (SOR/2025-96), published in the Canada Gazette in March 2025. The regulations provided for a 12-month transition period following the document’s registration, so the new rules took effect in March 2026.