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Overdraft Protection in Canada: How It Works, Fees and Interest by Bank

Updated

FCAC says an overdraft occurs when you don't have enough money in your bank account to cover a payment or withdrawal, and FCAC says overdraft protection is a financial product that covers the amount of the transaction when you go into overdraft. How it is charged, as a monthly fee or a fee each time it is used, plus interest, is in the sections below, and the table sets out each institution’s own terms.

What is overdraft protection, and how does it work?

FCAC says that with basic overdraft protection your financial institution lends you enough money to cover the transaction, up to an approved limit, so your account balance shows as a negative amount; you pay interest on the overdrawn amount and also usually a flat monthly fee or a fee each time you go into overdraft, depending on the fee option you have chosen.

FCAC also describes linking the account to another product: FCAC says most financial institutions offer basic overdraft protection or link your account to another financial product (a line of credit including a home equity line of credit, another account with money in it, or a credit card); your financial institution may charge a fee each time it transfers money from another financial product, a linked line of credit charges interest at the line of credit's rate, a linked account without enough money may lead to a denied transaction or an NSF fee, and a credit card is used through a cash advance with interest charged right away at a rate usually higher than the regular rate. How those products compare is on lines of credit, HELOCs and credit card cash advances, and what an NSF fee is on NSF fees.

What are the two ways overdraft protection is charged?

FCAC describes two fee options for basic overdraft protection, one charged every month and one charged each time the account goes into overdraft. FCAC says many financial institutions offer one or both fee options for basic overdraft protection, a monthly fee or a pay-per-use fee; you choose an option when you open your account or apply for overdraft protection, and if you already have overdraft protection you can change your fee option.

  • Monthly fee: FCAC says a monthly fee is a flat fee every month no matter how many times you go into overdraft, usually around $5; most financial institutions require it every month even when you do not go into overdraft, and some waive it in months you do not; if you pay a monthly fee your financial institution will not charge pay-per-use fees.
  • Pay-per-use fee: FCAC says a pay-per-use fee is a set fee each time you go into overdraft, with a maximum fee amount of $5; if the account is already overdrawn it is usually charged every time another transaction increases your overdraft balance, and some financial institutions charge it only one time each business day; if you pay pay-per-use fees you will not pay a flat monthly fee.

FCAC says some financial institutions may not charge overdraft protection fees if you have an account that includes overdraft protection at no extra cost, go into overdraft by a small amount such as $5 or less, or pay back the overdrawn amount before the end of the day.

Each institution’s own fee options, with their conditions, are in the table below.

How is overdraft interest charged?

FCAC says that when your bank account is overdrawn you pay interest each calendar day on the amount you owe, and the annual interest rate for overdraft protection is usually around 21-22%; interest is only part of the cost, since pay-per-use fees can significantly increase your total banking costs.

Each institution’s rate, and how it calculates and charges the interest where its document states that, is in the table’s Interest column; where a fee document gives no number, the cell says where the institution posts its rate.

Overdraft protection by institution

Each row is what one institution sells as overdraft protection, or as its own alternative to it, in its own words from its fee document or page: how it is granted, its fee options with their conditions, a charge for going past the limit or for a transfer where it lists one, and its interest; the first cell links a big bank’s own fee row and its account-by-account terms.

InstitutionHow it is grantedFee options, with their conditionsInterestSource
BMO
on BMO's fee table, account by account		Standard and Occasional Overdraft Protection are subject to credit approval; the Overdraft Transfer Service moves money from another eligible BMO account, a BMO Mastercard or a BMO line of credit to cover the overdraft on another accountStandard: $5.00 a month (this fee does not apply to residents of Québec); Occasional: $5.00 per use, charged for any business day in which an overdraft is created or increased on the account (not available for residents of Québec); both are included in the Premium Plan; subject to credit approval; the Overdraft Protection fees apply individually to each account with an authorized limit within the Plan
Transfer from another account: $5.00/transfer (free on the Premium Plan)		BMO's fee document gives no rate: interest is at BMO's prevailing overdraft interest rate, which can be obtained at BMO branches in Canada or by calling 1-877-225-5266; it is calculated on the daily overdraft balance and charged to the account at the end of the monthFees as of June 2, 2026
CIBC
on CIBC's fee table, account by account		CIBC Overdraft Protection Service (COPS) is available, subject to credit approval, on most Canadian dollar personal accounts; there are two fee options, Pay Per Use and Monthly Fixed FeePay Per Use: $5.00 for any business day (based on end-of-day balances) in which an overdraft is created or increased, no charge unless the overdraft is used, not available to Quebec residents; Monthly Fixed Fee: $5.00 applied at the end of every month whether or not the overdraft is used, not applicable to Quebec residents, and not applicable on up to 3 CIBC Smart Accounts in the Tier 3 column (average monthly balance of deposits and investments of $100,000 or more); CIBC Overdraft Protection Service (COPS), subject to credit approval21% per year, which may vary from time to time; calculated and debited monthly to the account, based on the final daily indebtedness in the account throughout the calendar monthFees as of March 12, 2026
Desjardins
A cooperative financial group; its fee guide names the Autorité des marchés financiers in Quebec and the Financial Services Regulatory Authority of Ontario as the authorities that authorize its deposit institutions		The caisse may advance the sum at its discretion$5.00 per caisse transfer21% a year (annual interest rate, calculated daily)Desjardins's fee document (PDF)
KOHOAll users who sign up for the Cover bundle get instant access to funds; KOHO says it does not perform credit checks for approvalKOHO Cover, a cash advance bundle KOHO presents as an alternative to overdraft: access up to $500; the bundle fee starts as low as $2 and varies with the amount of the cash advance; $0 interest; access to Cover is subject to a subscription to the paid Cover bundle–KOHO's page
Manulife Bank
on Manulife Bank's page		–$5.00 overdraft charge21% a year (calculated on the daily closing balance, charged monthly)Manulife Bank's fee document (PDF)
National BankNational Bank's Fee Guide notes that for new applicants, authorized overdraft has been replaced by the integrated line of creditOverdraft: $5.00 for each transaction that leads to or increases the overdraft, for a cheque, pre-authorized debit, payment instruction, debit card purchase or ABM withdrawal with insufficient funds (plus interest); no overdraft fees apply for the Personal Flex Line, All-In-One line of credit, Student Line of Credit, RRSP Line of Credit, integrated line of credit or any other authorized account overdraft. Specific Funds Transfer overdraft protection: $5.00/day, via funds transfer from another deposit account, from a margin account or from a National Bank Mastercard. The guide lists overdraft protection at No fees in its offers for professionalsInterest is charged on top of the overdraft fee ("plus interest"); the Fee Guide gives no rate and says interest rates are posted in branches and on nbc.ca and are subject to change without noticeNational Bank's fee document (PDF)
RBC
on RBC's fee table, account by account		Optional: you must qualify through an application and give your consent, and Overdraft Protection is subject to approval; RBC sets your Overdraft Protection Limit from your credit score and your credit performance with RBC (and, on a joint account, from any co-owner's)$5.00/month (waived on RBC VIP Banking and RBC Signature No Limit Banking; not charged if any account owner is a Quebec resident)
Going past the limit, or no protection: $5.00, charged when you overdraw your approved Overdraft Protection Limit (not charged if any account owner is a Quebec resident)		22% per year, calculated on the daily closing overdraft balance and collected from the account on the second business day after the 15th calendar day of the monthFees as of August 3, 2026
Scotiabank
on Scotiabank's fee table, account by account		Overdraft Protection is available, if your credit is approved, on all bank accounts except the Scotia US Dollar Daily Interest Account, the Scotia Euro Daily Interest Savings Account, the Money Master Savings Account and the Scotiabank Momentum PLUS Savings Account; you must bring accounts in overdraft to a positive balance at least once every 30 daysPay-per-use Overdraft Protection Plan (not available in Quebec): a $5.00 per-use fee applied on the same day or within two business days every time an overdraft is created or increased, not charged more than once per day, and no fee if you do not use the overdraft. Monthly Overdraft Protection Plan: a $5.00 monthly fee applied at the end of a statement cycle regardless of the number of overdraft transactions as long as the overdrawn balance is within the pre-authorized limit, and even in a month the account did not go into overdraft. Modified Monthly Overdraft Protection Plan (existing clients in Quebec who had Overdraft Protection before May 21, 2021): a $5.00 fee per month if the account is overdrawn a day or more. Scotiabank says the plan fees (Monthly, Modified Monthly or Pay-per-use) do not apply to plans where at least one plan holder resides in Quebec, and do not apply if the Overdraft Protection is approved under a Scotia Total Equity Plan; Ultimate Package account holders who add Overdraft Protection have the fee(s) automatically waived
Going past the limit, or no protection: $5.00 per payment from your account if you are overdrawn past your pre-authorized limit; without Overdraft Protection, a $5.00 handling fee for each item that places the account in overdraft and $5.00 for each payment while the overdraft balance is outstanding		21% per year, calculated daily on the overdrawn balance and charged monthlyFees as of September 2026
Simplii FinancialOverdraft protection is an optional service available as a supplement to your bank account, only on select bank accounts, which includes the No Fee Chequing Account; it is available after Simplii has approved you and received all documentation necessary for its activation$4.97 per month, only charged if the account is in overdraft on any day during the month (the fee is charged once in any month in which you use overdraft protection, for your first use, and posted to the account at the end of the month); listed for Canadian dollar accounts, Not applicable for foreign currency accounts
Going past the limit, or no protection: If you do not have overdraft protection and Simplii chooses to process a debit that overdraws your account (based on end-of-day balances), you are charged the overdraft protection fee, plus interest at Simplii's then current overdraft interest rate, on the indebtedness; Simplii has no obligation to allow such a debit again		A fixed interest rate of 19% per annum on overdraft balances (rate subject to change), calculated on the final daily overdraft balance throughout the month and charged monthly to the bank accountSimplii Financial's fee document (PDF)
TangerineOptional Overdraft Protection on the Tangerine Chequing Account$5 per use on the Tangerine Chequing Account (the optional Overdraft Protection Fee), charged up to a maximum of once per month: it is applied on the day you go into overdraft if the balance remains overdrawn at 11:59 PM ET on that calendar day, and in any following month in which the overdrawn amount becomes further overdrawn it is applied on the day the overdrawn amount is increased; Tangerine may lower or waive the fee at its discretion; there is no monthly fee for Overdraft Protection if the account does not go into overdraft19.00% per annum, calculated daily on the daily closing overdrawn balance and charged to the account monthlyTangerine's page
TD
on TD's fee table, account by account		TD says Overdraft Protection is a service that allows you to access funds up to your approved limit to help you cover day to day expenses when funds are low in your TD Chequing AccountMonthly Plan: $5.00 a month on TD Every Day Chequing, TD Unlimited Chequing, the TD All-Inclusive Banking Plan and TD Minimum Chequing; $4.00 a month on Plan 60 and Preferred Chequing; $0.00 a month on TD Student Chequing, U.S. Daily Interest Chequing and the Borderless Plan, and on TD Minimum Chequing as long as its monthly chequing account fee is $0 because a holder is a Recipient of the Guaranteed Income Supplement, a Beneficiary of the Registered Disability Savings Plan, Indigenous Peoples from Canada or a Newcomer to Canada (for the 1st year in Canada); Quebec accounts with the Monthly Plan pay $0.00 a month. Pay As You Go (not available on Quebec accounts): $5.00 for each eligible overdraft transaction, maximum $5.00 a day regardless of the number of overdraft transactions21% a yearTD's page
Fees as of March 5, 2026
Wealthsimple
Wealthsimple says it is not a bank		Wealthsimple overdraft protection covers recurring bill payments and pre-authorized debits when there is a shortfall in your chequing account by borrowing from your portfolio line of credit; it uses a client's existing portfolio line of credit, which is a margin loan, and only offers coverage for specific transaction typesNo fee: Wealthsimple says its overdraft protection has no NSF fees, no subscription and no per-use charges, no application; the shortfall is covered from your portfolio line of credit, so interest accrues on the amount borrowed at your line of credit rate until you repay itInterest accrues at your portfolio line of credit rate, which Wealthsimple's overdraft page describes as tied to primeWealthsimple's page
Wealthsimple's page

A dash means this table shows nothing for that cell.

Checked against each institution's pages between October 20, 2026 and October 21, 2026.

Institutions in this table: BMO, CIBC, Desjardins, KOHO, Manulife Bank, National Bank, RBC, Scotiabank, Simplii Financial, Tangerine, TD and Wealthsimple.

What institutions charge for a returned payment is compared on NSF fees by institution, and other fees on bank fees compared.

What happens without overdraft protection, or past the limit?

FCAC says that if you do not have overdraft protection and cannot cover a transaction, some financial institutions might allow it and charge a small fee (an overdraft courtesy fee, ad-hoc fee or casual overdraft fee), which can help you avoid a more expensive NSF fee; the fee may be charged only the first time, and you may have to pay an NSF fee if you go into overdraft a second time without overdraft protection; how an overdraft and an NSF fee differ is on NSF fees.

A payment that is not covered may be returned with an NSF fee; the federal rule on that fee says: Since March 12, 2026, a federally regulated bank may charge a natural person no more than $10 when there are not enough funds in their personal deposit account to cover a payment drawn on it. It may not charge a non-sufficient funds fee more than once within two business days on the same personal deposit account, or when the account is in unauthorized overdraft by less than $10. The limits do not apply to business accounts or to the fee a merchant, lender or other recipient of the payment charges. The rule in full, and who it covers, is on NSF fees.

Where an institution lists a separate overdraft charge for going past an approved limit, it is in the table’s fee column; an NSF fee an institution charges on a payment past the limit is in the table on NSF fees by institution. A declined debit purchase is covered on why a debit card is declined, and a declined ATM withdrawal and ATM fees on ATM fees and limits.

Getting, using and cancelling overdraft protection

FCAC sets out how overdraft protection is granted, used and ended:

  • FCAC says basic overdraft protection is credit, so your financial institution will require an application; you must be the age of majority (18 in Alberta, Saskatchewan, Manitoba, Ontario, Quebec and Prince Edward Island; 19 in British Columbia, New Brunswick, Nova Scotia, Newfoundland and Labrador, Yukon, the Northwest Territories and Nunavut); it will usually consider your income, your debts and loans, your credit history and how long you have been a customer.
  • FCAC says financial institutions must obtain your express consent to add overdraft protection to your account, many reserve the right to refuse a transaction when you go into overdraft, and many reserve the right to cancel your overdraft protection without notice, for example if you do not pay off your overdraft balance by the deadline in your agreement; what a bank discloses about its fees is on fee disclosure.
  • FCAC says limits for basic overdraft protection can vary, suggests asking for a limit less than your regular paycheque after taxes and deductions, and says your financial institution can decide to change your overdraft limit, possibly without first letting you know.
  • FCAC says overdraft protection is not meant to be an ongoing option to manage any money shortfall but a short-term solution to cover a necessary expense, and that your account may default, which could hurt your credit score, if you do not repay your overdraft balance by the deadline in your agreement; what else affects a score is on what hurts a credit score.
  • FCAC says financial institutions can usually cancel your overdraft protection within 10 days after you provide written notice, some allow you to cancel by phone, and when you cancel you still need to pay any overdraft balance that you owe.

Sources

The figures and rules on this page come from these sources, last checked against them between September 14, 2026 and October 21, 2026. How we check facts.