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When banking, you may, unfortunately, encounter bounced cheques and non-sufficient funds (NSF) fees. These can occur if a preauthorized payment is pulled from your account there isn’t enough money to cover it or if you write a cheque and it bounces because of insufficient funds in your account. In order to avoid both of these situations, it is important to educate yourself on why a cheque bounces and the other issues surrounding NSF fees.
Bank | NSF Fee |
TD Bank | $48 |
Bank of Montreal | $48 |
Royal Bank of Canada | $45 |
Scotiabank | $48 |
CIBC | $45 |
National Bank | $45 |
PC Financial | $45 |
Tangerine | $25 |
Simplii Financial | $45 |
When it comes to bounced cheques and insufficient, funds there are many causes you should be aware of.
If you write a cheque to someone and do not have sufficient funds in your account to cover it, the cheque will bounce and you will likely receive an NSF fee. This can happen if you are anticipating a deposit to your account and you write a cheque with the expectation that the aforementioned money will be in your account and it ends up being delayed.
Although it is highly unlikely, there is a chance your bank could think you do not have sufficient funds in your account to cover a cheque when, in fact, you do.
This can occur when you write a cheque at a time when you have sufficient funds, however, the cheque was not deposited until later when there was not enough money in your account.
This can occur if you change banks and a cheque you had written was deposited after your account was closed. Therefore, the cheque would bounce.
This could occur when someone writes a cheque knowing they do not have sufficient funds to cover the amount. For example, an individual purchases an item with a cheque, knowing they cannot afford it and the person they have bought from will be left unable to collect the money they are owed.
Being on the receiving end of a bad cheque can be costly and to be frank, awkward. Although it depends on the situation, it can be difficult to recover the funds you are owed. It can take a while for the bank to notice that the cheque has bounced, and in that time it’s possible you have already spent the funds. If you have spent the funds, the bank will revoke them which can possibly put you into overdraft or a negative account balance. If you’re lucky enough to have a large bank backing you up, they will have the means to get the cheque writer to pay up properly. If the cheque writer is particularly dodgy or sketchy, you may have to seek legal help to recover the money you’re owed.
If you’re considering paying for overdraft protection to help you avoid any unnecessary NSF fees, you should consider the pros and cons first.
It is best to avoid NSF fees and bounced cheques, however, things do happen and it is best to cooperate with your bank to find the right solution for you. By keeping a close eye on your finances and keeping a cash cushion in your account, you can steer clear of these situations.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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