Your Bank Account

This script discusses your bank account and related service charges, NSF cheques, bank errors, stolen PIN numbers, and joint accounts.

You have a written agreement with your bank

People usually don’t think much about their relationship with the bank. But the important details are always set out in writing. When you open a bank account, you typically have to sign a number of forms. One form is usually a signature card, so that the bank has a record of your true signature. For a chequing account, you have to sign a form to obtain personalized cheques. But at least one of the documents you sign contains the terms and conditions by which you agree to let the bank operate your account.

Different banks use different forms of agreement

Most of the agreements contain similar terms, but the only way to find out exactly what you’ve agreed to is to get a copy of the document from your bank and to read it.

Do you automatically get overdraft privileges?

No. If you have a personal chequing account, you expect your bank to honour your cheques when you write them. But unless you’ve arranged in advance for overdraft privileges, your agreement likely says that the bank only has to honour a cheque if there’s enough money in your account. And if the bank chooses to allow you to go into overdraft, they can charge you interest at a rate determined by the bank. If you’ve arranged for overdraft privileges, make sure this is recorded in writing. Note that if you pay for goods or services and your bank doesn’t honour your cheque because you don’t have enough funds in your account, you could end up with a poor credit rating.

What about service charges?

Depending on your account, you may be charged for the cheques you write and for other services that the bank provides. For example, every time you go into overdraft, you may have to pay a certain minimum charge in addition to interest. Or you may have to pay a service charge every time you use a bank machine or ATM (automated teller machine). While your account agreement likely doesn’t say specifically what those service charges are, it probably says that you agree to be bound by the bank's general schedule of rates and that the bank may debit your account for any charges that the bank may establish from time to time.

Now, when you open an account, banks must tell you what their service charges are, listed in their information brochures and posted on their websites. So if you’re looking to open a bank account, shop around between banks to find the account option that best suits your needs. But remember that most banks will change these from time to time, and if your agreement permits, this will be done without notice to you. Even if your agreement requires the bank to notify you about changes in your service charges, the bank can generally do this by mailing a notice to your address, and they don’t need your consent to change these charges.

What about “NSF” cheques?

If someone pays you with a cheque written on another bank account, normally you take that cheque to your own bank to cash or deposit it. Your bank will typically accept cheques drawn on other banks and present them to those other banks for payment – or to be "cleared," as it's called. Unfortunately, sometimes a cheque doesn’t clear, and it’s returned to your bank stamped "NSF" or "Not Sufficient Funds.”

Your agreement with your bank says that the bank can debit your account for the amount of the NSF cheque – whether or not you’ve cashed it or received the funds. Even if your bank is slow and ignores the normal rules about clearing cheques in a timely fashion, it’s usually the customer who gets stuck. In rare cases, where the bank's delay results in a cheque not clearing, you may have a claim against your bank, but even this may be limited or denied by the terms of your agreement.

Read your bank statements carefully

The first that you may learn of a cheque returned “NSF” may be from your statement. Also, in your agreement with the bank, you promise to be responsible for making sure that the statement is true.

What if the bank makes a mistake?

You have a certain period of time to point out that mistake to the bank – normally 30 days from the date the bank mails you your statement. If you don't point out the mistake, you’re considered to have agreed that the balance shown in your statement is correct.

The only usual exceptions are if the bank makes a mistake in your favour by putting too much money into your account, or if the mistake is the result of someone forging a signature on your cheque, in which case you should take immediate steps to make a claim.

If a mistake is made, you have to prove it

For this reason, always get a receipt for any deposit that you make, and keep your cancelled cheques and bank statements for a reasonable period of time. If you use a bank machine or ATM, keep the receipts provided by the machine so they can be compared against your account statements. This way, you’ll have a record of all of the transactions in your account. Remember that any deposits and transactions made at a bank machine on a weekend or holiday are processed on the branch’s next banking day.

Note that ATM receipts aren’t considered proof of actual deposits to your account. Only a bank teller receipt or copies of the actual deposited cheques are accepted as evidence of a deposit.

What if someone uses your PIN or bank machine card?

When you have a bank machine card and “personal identification number” or PIN, you’re responsible for all amounts withdrawn from your account through the authorized use of your card. So if you lose your card or find out that someone has stolen your card or PIN, phone the bank immediately. Most agreements require you to phone within 24 hours.

You normally won’t be responsible for the unauthorized use of your card and/or PIN after you’ve advised the bank about the loss or theft. But you must not have “knowingly contributed” to the unauthorized use, for example, by lending your card to a friend to withdraw money on a particular occasion. And you must have been careful to keep your PIN separate from your card.

For more information about bank cards, refer to script 246 on “Buying Goods on Credit, Credit Cards and Credit Bureaus”.

How does a joint account work?

If you have a joint account with one or more people, depending on how the signature card is signed, you agree that the bank can pay out funds on a cheque or withdrawal signed by any of the account holders. This means that if the account is overdrawn, the bank can demand repayment of the full amount from anyone who has signed the signature card. If you end up paying more than your share of the overdraft, then it’s up to you, not the bank, to get the difference from the other account holders.

What happens if you don’t use your account?

The federal Bank Act says that if you haven’t used your account for ten years or more, any money left in it must be transferred to the Bank of Canada. For more information on this point, call 1.800.303.1282 and ask for "Unclaimed Balances" or email ucbalances@bankofcanada.ca.

What should you do if you have a complaint?

First, discuss the problem with your bank’s branch manager. If you’re not satisfied with the response, contact the bank’s head office. You can get a contact name and telephone number by calling the Office of the Superintendent of Financial Institutions (OSFI) at 1.800.385.8647. OSFI is the federal government agency that supervises and regulates Canadian banks. Their website is www.osfi-bsif.gc.ca. If you’re still dissatisfied, you may contact the Ombudsman for Banking Services and Investments at 1.888.451.4519. Their website is www.obsi.ca. Of course, if you have a legal problem, you may need to consult a lawyer.

Where can you find more information?

See the manual Consumer Law and Credit/Debt Law published by the Legal Services Society, BC and available for free on their website at www.legalaid.bc.ca. To find it, click “Our Publications” then under “I want to find a publication by subject,” click “Consumer & debt”. This manual is for paralegals, legal information counsellors, and lawyers with clients who have consumer/debt problems. The federal Bank Act is available online at http://laws-lois.justice.gc.ca/eng.

[updated November 2014]

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