Can the New Cap on NSF Fees Help You Get Back on Track?

Nearly 34% of Canadians pay a non-sufficient funds (NSF) fee in any given year, according to the Department of Finance Canada.

Banks may charge up to $48 per transaction if an account balance is too low to cover a cheque or pre-authorized debit.

These NSF fees can add up quickly. And in some cases, merchants may pile additional fees on top of the NSF charge.

For many, NSF fees make it harder to stay on budget. The good news: Changes are on the way that will cap these fees, offering some Canadians breathing room and a chance to get back on track.

Here’s what’s changing

In March 2026, amendments to the Financial Consumer Protection Framework Regulations (the FCPFR) take effect. They apply only to federally regulated banks and credit unions under the Bank Act and include:

A $10 cap per NSF fee.
Banks will be prevented from charging more than one NSF fee within two business days.
No NSF fee if an account is short by less than $10.
Financial institutions must alert customers and give them time to deposit funds before charging an NSF fee.

The new rules do not apply to other fees a merchant may charge.

🤓 Nerdy Tip: Not sure if your bank is federally regulated? Check your institution’s website or contact customer support.

Why this matters for many families

Over the next 10 years, these changes could put an estimated $4.1 billion back in Canadians’ pockets. That’s $410 million a year, which would cover the annual grocery expenses for nearly 27,000 families of four, according to ACORN (Association of Community Organizations for Reform Now) Canada.

“For low- and moderate-income households, the difference could be huge,” says Kristina Collier, a member of ACORN Canada in Hamilton, Ontario. “ACORN’s national survey found that over half of our members can’t cover a single month’s expenses, which means they’re almost guaranteed to get hit with NSF fees every month.”

“For households already operating with little or no budget margin, anything that eases that daily pressure reduces the chance they’ll default on rent, fall behind on debt or turn to predatory lenders,” she adds.

A chance to reset your finances

Whether you overdraw your chequing account by accident or because money is tight, the new NSF rules have the potential to positively impact your budget.

At the moment, it is easy for occasional slip-ups to result in significant penalties over time, says Tina Filion, partnership and education specialist with the Credit Counselling Society in Ottawa. “The cap helps reduce the snowball effect that NSF fees can trigger, especially when compounded by late fees as well, or further banking charges.”

If a lower NSF fee leaves you a bit less stressed — and with a few extra dollars — use it to make meaningful progress.

Change your banking habits

The ideal outcome is to avoid the NSF fees altogether. Filion suggests taking a step back to understand why you’re incurring them.

For example, if timing is an issue, switch any automated bill payments to better sync up with your payday.

If you’re losing track of your cash flow, this is your cue to set low-balance alerts or regular calendar reminders to check your account balance.

Start an emergency fund

The new NSF fee cap could mean that if you don’t have enough funds to cover a transaction, you may pay up to $38 less than you do now.

“You can have small savings from reduced fees that can be used for starting an emergency fund, even if you’re able to put $100 that wasn’t there before,” Filion says. “All those little steps can really make a difference.”

Pay down high-interest debt

Another smart move for that “extra cash,” says Filion, is to pay more than the minimum on high-interest debts, including ‘buy now, pay later’ plans. You’ll gain more control over your finances and move a bit further ahead on your path to becoming debt-free.

What can I do before March?

You don’t have to wait for the new rules to cut NSF fees. Use these tips to ease the NSF pain or avoid it completely.

Add a financial buffer: Consider setting up overdraft protection on your chequing account. This feature is usually available for a monthly fee or on a pay-per-use basis, and covers overdrawn expenses up to a certain amount.

🤓 Nerdy Tip: Overdraft protection can help you avoid NSF fees, but you’ll pay interest and, in some cases, a per-use fee on the overdrawn amount, which could be higher depending on the rate and length. Compare the overall costs.

Compare accounts: Think about switching to a financial institution that offers low or no NSF fees on certain accounts, such as the EQ Bank Personal Account.

Use a prepaid card: Weigh the merits of a prepaid card, which might give you better control over spending and help you avoid overdraft charges.