In one of his last acts in office, the government of former Prime Minister Justin Trudeau decided to give the Canadians a break in the bank.
According to an order in the contract council of March 12, two days before Trudeau resigned, banks will not be allowed to collect more than $ 10 if someone does not have enough money in their personal accounts to cover a check or a pre -authorized debit.
Most banks charge non -enough fund rates (NSF) from $ 45 to $ 48 per transaction if an account holder has no protection against overwhelming, which usually comes with its own monthly rate.
Banks will also be forbidden to collect NSF rates more than once within a period of two business days and in cases where the overdraft is less than $ 10.
To prevent bank account holders accidentally incurred in a NSF position, banks will also have to send an alert that gives the holders at least three hours of notification that a payment exceeds their bank balance. If the account holder deposits money to cover the payment within that period, the banks cannot collect the rate.
The new regulations will be applied to personal and joint accounts, but not to corporate or commercial accounts. They will enter into force on March 12, 2026.
The government predicts that the measure will reduce NSF rates charged by Canadian banks by $ 4.1 billion in 10 years.
The spokeswoman for the Finance Department, Marie-France Faucher, said that the order reaches the end of a process that began with a press release in 2023, as well as ads in the 2024 budget and the autumn economic declaration of the government government.
“This work included large consultations with groups of consumers and banks to ensure that regulations provide sufficient protection for consumers, while they were technically feasible to implement,” Faucher wrote in a response sent by email.
The Canadian Banking Association, which defended NSF rates to the Government, says its members will comply with the new rules.
“Now that the Finance Department ended the NSF rates regulations, the banks of the banks will focus on making the required system and the process changes to meet,” said Maggie Cheung, manager of relations with the media of the association.
Cheung said that charging fees for payments that exceed bank balances help the Canada banking system and there are ways to avoid them.
“NSF rates foster responsible banking behavior and help maintain the integrity of the payment system,” he wrote in an email. “To avoid these rates, customers can regularly monitor their account balances, configure balance alerts and consider overflowing services.”
Alejandra Ruiz Vargas, president of Acorn Canada, who has argued that NSF rates disproportionately affected the low -income Canadians, was delighted that the government finally had acted in its promise.
“We are on the moon,” he said in an interview.
“This is something that we have been working so long and so hard. Finally, the government has paid attention to our concerns.”
Vargas said that even if someone only costs $ 5 to pay an invoice or cover a check, it can be affected with a rate of up to $ 48, money that could have used for groceries or medications.
“It’s a window of hope for people,” he said about change.
Vargas said Acorn would have liked the government to ban NSF rates, and that the change arises faster.
However, in a 24 -page regulatory impact assessment sent to Acorn, the Finance Department says it chose a $ 10 limit for a reason.
“A $ 10 limit was chosen to balance the need to protect consumers from high rates with the need to maintain the integrity of the payment system by encouraging consumers to honor their payments,” the department wrote.
The Finance Department estimates that Canadian banks charged rates at 15.8 million NSF transactions in 2023, reaching an estimate of 34 percent of Canadians.
The evaluation says that NSF rates “represent a source of financial difficulties for consumers. These rates disproportionately damage low -income Canadians and contribute to debt cycles.”
He said that these rates can quickly accumulate “as a result of multiple payments in decline”, and that new regulations “will probably benefit from women, solitary matrices families, recent immigrants and indigenous peoples.”
While some banks offer a period of grace, flexibility or protection against overwhelms so that a account holder covers the payment, not all customers have protection against overwhelming, says the evaluation.
The Finance Department says that the new regulations will apply to 79 financial institutions throughout Canada.
The details of the new regulations will be published in the Canada Gazette on March 26.
