Your Bank Account

This script discusses bank accounts 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 a written agreement. When you open a bank account, you must typically sign some forms. One form is usually a signature card, so that the bank has a record of your true signature. For a chequing account, you must sign a form to obtain personalized cheques. But at least one of the documents you sign has the details (that you agree to) on how the bank will operate your account.

Different banks use different agreements

Most of the agreements have 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 read it.

Overdraft privileges

Overdraft privileges are not automatic. If you have a personal chequing account, you expect your bank to honour your cheques when you write them. But unless you’ve arranged for overdraft privileges (where the bank will honour your cheque even if you don’t have enough money in your account to cover it) your agreement likely says that the bank must honour a cheque only if there’s enough money in your account. And if the bank lets you go into overdraft, they can charge you interest at a rate they set. If you’ve arranged for overdraft privileges, make sure this is recorded in writing. 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, it could hurt your credit rating.

Service charges

Service charges vary a lot between banks and accounts. 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 an overdraft fee, plus interest. Or you may have to pay a service charge every time you use a bank machine or ATM (automated teller machine). Often banks will have package deals with a set monthly charge for a certain number of transactions. They may also waive fees if you keep a minimum balance in your account. While your account agreement likely doesn’t say specifically what cost 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 sets from time to time.

When you open an account, banks must tell you what their service charges are. The charges are normally listed on their websites, too. So if you’re looking to open a bank account, shop around to find the account option best for you. Most banks change their charges periodically, 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.

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. Or you deposit it using your phone. Your bank will typically accept cheques from other banks, credit the money to your account, and present the cheque to those other banks for payment—or to be cleared. But sometimes a cheque bounces. That means it doesn’t clear because there’s not enough money in the account, and it’s returned to your bank stamped NSF or Not Sufficient Funds.

Your agreement with your bank says that the bank can then debit your account for the amount of an NSF cheque—even if you have not withdrawn the money. That’s true even if your bank is slow and ignores the normal rules about clearing cheques promptly. It’s possible for your bank's delay to cause a cheque not to clear: for example, there was enough money in the account to cover the cheque when it was written but your bank delays in presenting it to the other bank to be cleared. By the time your bank does that, there’s no longer enough money in the account. Rarely, in that case, you may have a claim against your bank, but even this may be limited or denied by your agreement with the bank.

Banks have their own policies on whether you can re-deposit an NSF cheque (and if so, how many times).

Online banking and electronic funds transfers

Online banking and electronic fund transfers (EFTs) are becoming much more common. EFTs are simpler than cheques because they fail immediately if there’s not enough money in an account. So some of the problems with cheques don’t arise. On the other hand, because this is a new area of banking, there is not much case law on it yet, compared to case law on cheques.

Check your bank statements carefully

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

If a bank makes a mistake

You have a certain time to point out that mistake to the bank—normally 30 days from the date the bank mails you your statement or posts it online. 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 exceptions are if the bank mistakenly puts money into your account. Then, the 30-day rules does not apply. Another exception is if someone forges your signature on your cheque. The 30-day limit does not apply and you should immediately notify the bank and make a claim for the lost money.

If a mistake is made, you must 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 time. If you use a bank machine or ATM, keep the receipts from the machine to compare them with your account statements. This way, you’ll have a record of all the transactions in your account. Any deposits and transactions made at a bank machine on a weekend or holiday are processed on the branch’s next banking day.

ATM receipts aren’t considered proof of actual deposits to your account. But they are better than nothing. Only a bank teller receipt or copies of the actual deposited cheques are accepted as evidence of a deposit.

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 or PIN after you’ve told 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. And you must have been careful to keep your PIN separate from your card.

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

Joint bank accounts

If you have a joint account with someone, 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.

If you don’t use your account

The federal Bank Act says that if you haven’t used your account for 10 years or more, any money left in it must be transferred to the Bank of Canada. For more information on this, call 1.800.303.1282 and ask for “unclaimed balances” or click on “Unclaimed Balances” or email ucbalances@bankofcanada.ca.

If you have a complaint against a bank

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. If you’re still dissatisfied, you can contact the Ombudsman for Banking Services and Investments at 1.888.451.4519. Of course, if you have a legal problem, you may need to see a lawyer.

[updated July 2018]

The above was last reviewed for accuracy by Bruce Hallsor and edited by John Blois.

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