TLDR
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Non-sufficient funds (NSF) fees happen when your account doesn’t have enough money to cover a cheque or pre-authorized payment, and you don’t have overdraft protection.
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Insufficient funds have a double impact: there’s the fee itself, and the potential hit to your credit score if the result is a missed payment on a loan, bill or credit card.
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Starting in 2026, NSF fees will be capped in Canada – but avoiding them altogether is even better.
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There are tools and apps that can help you keep track of your money and avoid overdrawing your account.
It happens. Life gets busy, and sometimes you lose track of what’s coming in and what’s going out of your account. And sometimes, your account doesn’t have sufficient funds to cover payments, subscriptions or other expenses. The good news? There are ways to avoid being caught off guard with insufficient funds.
What are non-sufficient funds fees?
Non-sufficient funds (NSF) fees are charged when there isn’t enough money in your bank account to cover a cheque or pre-authorized expense, and you don’t have overdraft protection to cover the gap.
If this has happened before, you’re far from alone. According to recent data, 34% of Canadians were charged an NSF fee in 2023, most often because of forgotten subscription renewals or pre-authorized payments.
The impact of having insufficient funds is twofold: there’s the NSF fee itself, and if the result is a missed payment on a loan, bill or credit card, your credit score could also take a hit. While the Government of Canada is implementing new regulations to limit the NSF fee to $10 as of 2026, it’s still a penalty that can be avoided. The right tools and planning can help make it easier.
Five smart ways to avoid NSF fees
1. Set up real-time alerts and track your balance
Keeping an eye on your account activity is always a good idea. When you’re monitoring your account regularly, you can keep track of your balance, spot unusual or unauthorized transactions and track forgotten subscriptions. And it’s super easy to do – you can check in on your balance through your bank’s mobile app when you’re waiting in line at the grocery store, or log into your online banking while at your computer, catching up on email.
If you’re not in the habit of proactively checking in on your balance, setting up account alerts can keep you in the know. Many banks let you set notifications when your balance dips below a set amount (say, $100). That way, you’ll know before things get too close to zero.
There are other tools that can help, too. NOMI Insights, available within the RBC Mobile app, analyzes your monthly cash flow and categorizes your spending to show you exactly what your money is doing and where it’s going next. It will even tell you if it looks like you won’t have enough money in your account to cover an upcoming expense.
2. Use overdraft protection wisely
Overdraft protection is like a safety net – it can cover shortfalls up to a certain limit, allowing your transactions to go through and avoiding NSF fees. Depending on your bank, you may pay a monthly fee to have it on call when you need it, or a fee for each time you use it.
While overdraft protection can be very handy, it’s best to treat it as a backup, and not a regular solution. Relying on it too often can lead to extra costs that can add up quickly.
3. Audit ‘grey charges’ and hidden subscriptions
Have you heard of grey charges? These are recurring expenses that you might have forgotten about – like a gym membership you thought you cancelled or a streaming service you don’t use anymore.
Hidden subscriptions can also slip through – think free trials that quietly switch to paid, or unclear sign-up terms that result in ongoing charges.
While these charges might seem small on their own, they can add up quickly – and could be the difference between a positive balance and an overdrawn account.
4. Align payments with your payday
If you have large, regular payments that come out of your account automatically – such as rent, mortgage, or car payments – try to line them up with the timing of your paycheque. In doing so, you can be confident that you’ll have enough money in your account to cover your biggest (and likely most important) expenses of the month.
5. Build a small safety cushion
While saving money can be tough at times, even a modest buffer in your account can give you some breathing room. A cushion of a few hundred dollars – or ideally, up to a month’s worth of expenses – means that if you forget about a payment or subscription, you’re still covered. Creating a budget can help you carve out extra money for some breathing room.
Using electronic statements or eStatements instead of paper statements is another way to keep track of your money online.
Many Canadians have accidentally overdrawn their accounts at one time or another – but it’s not a habit anyone wants to get into. With alerts, tools and a few simple adjustments, you can avoid NSF fees and manage your money with confidence.
