Returned Payment / NSF Canada 2025

Q: What Is an NSF Fee in Canada?

NSF stands for Non-Sufficient Funds . An NSF fee (also called a returned payment fee or dishonoured payment fee) is charged when you attempt a payment but don't have enough money in your account to cover it. Your bank returns the payment to the recipient unpaid — and charges you a fee for the attempt.

What Is an NSF Fee in Canada?

NSF stands for Non-Sufficient Funds. An NSF fee (also called a returned payment fee or dishonoured payment fee) is charged when you attempt a payment but don't have enough money in your account to cover it. Your bank returns the payment to the recipient unpaid — and charges you a fee for the attempt.

A returned payment in Canada triggers two potential fees: one from your bank and one from the payee (the company or person you were paying).

NSF Fees at Canadian Banks in 2025

Bank	NSF Fee per Item
TD Canada Trust	$48
RBC Royal Bank	$45
Scotiabank	$48
BMO Bank of Montreal	$48
CIBC	$45
National Bank	$45
Tangerine	$45
PC Financial	$45
KOHO (prepaid)	$0 — NSF impossible

Note: NSF fees may vary by account type. The federal government's Financial Consumer Agency of Canada (FCAC) is studying NSF fees as part of broader bank fee reform.

What Happens When You Get an NSF?

Payment is returned — Your bank sends the cheque, EFT, or pre-authorized debit back to the payee marked "returned NSF."
Your bank charges you — Typically $45–$48 per item, charged immediately.
The payee charges you — The landlord, utility company, or creditor may charge an additional $20–$50 returned payment fee.
Payment is still owed — The original payment remains unpaid. You'll need to arrange an alternative payment.
Potential credit impact — If the missed payment is to a creditor (credit card, loan), it may be reported as a late payment to the credit bureaus.

NSF on Rent, CRA, and Loan Payments

Rent

A returned cheque for rent puts you in arrears with your landlord. Under most provincial tenancy laws, your landlord can serve an N4 (Ontario) or equivalent notice to terminate the tenancy for non-payment of rent. Repeated NSFs can be grounds for eviction proceedings.

CRA Payments

A returned CRA payment may result in penalties and interest. The CRA charges compound daily interest on outstanding balances. They may also apply a dishonoured payment penalty if it happens repeatedly.

Loan / Credit Card Payments

A returned payment on a credit card or loan counts as a missed payment. After 30 days, the lender typically reports it to Equifax and TransUnion, damaging your credit score. Late payment notations can remain on your credit report for 6 years.

      New 2024 Federal Rules: The federal government announced plans to cap NSF fees at Canadian federally regulated banks. Proposed changes would limit NSF fees to prevent the "cascade" effect where one low-balance situation triggers multiple fees. Check the FCAC website for the latest regulations.
    

How to Avoid NSF Fees

Keep a buffer — Maintain at least $100–$200 in your chequing account above your regular expenses
Set up overdraft protection — Links to a savings account (usually free) or an overdraft line of credit (interest applies)
Time your payments — If you're paid bi-weekly, schedule bill payments for the day after your paycheque deposits
Use a prepaid card like KOHO — You can only spend what you load; NSF is structurally impossible
Low balance alerts — Enable push notifications from your banking app to alert you when your balance drops below a threshold
Review pre-authorized debits — Know every PAD (Pre-Authorized Debit) scheduled from your account and their dates

Can You Get an NSF Fee Reversed?

Yes — especially if it's your first time. Call your bank, explain the situation, and ask for a one-time courtesy reversal. Most major Canadian banks will reverse one NSF fee per year for customers in good standing. Be polite, brief, and ask directly.

Frequently Asked Questions

Does an NSF fee affect my credit score in Canada?

The NSF fee itself doesn't affect your credit score. However, if the missed payment was to a creditor (credit card, loan, line of credit), the creditor may report the missed payment to Equifax or TransUnion after 30 days, which will damage your credit score. Bank account NSF events are generally not reported to credit bureaus directly.

How many NSF fees can a bank charge for the same payment?

Typically, your bank charges one NSF fee per returned item. However, if a payee resubmits the payment electronically (which is common practice), and it bounces again, your bank may charge another NSF fee for the second attempt. Some payees resubmit 2–3 times, potentially tripling the fees from one missed payment.

What's the difference between NSF and overdraft?

An NSF (Non-Sufficient Funds) results in the payment being returned unpaid — the transaction is declined. Overdraft protection allows the payment to go through even if you don't have sufficient funds, but you're charged overdraft fees or interest on the negative balance. Overdraft is more expensive over time but avoids returned payment consequences.

Can a landlord charge an NSF fee in addition to the bank fee?

Yes, most landlords include a returned cheque fee clause in the lease — commonly $25–$50. Provincial tenancy acts generally permit this reasonable administrative charge. Review your lease for the specific amount. You owe both the bank fee and the landlord's fee.

Is KOHO a good option to avoid NSF fees?

Yes. KOHO is a prepaid Visa card — you load money onto it and can only spend what's there. There is no overdraft, no credit facility, and therefore no NSF fees are possible. It's an excellent tool for Canadians managing tight budgets or rebuilding financial habits. New accounts get $100 cash with code 45ET55JSYA.

Eliminate NSF Fees Permanently

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Returned Payment / NSF Canada 2025 — What Happens & Fees

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