Here is what the big banks charge, how the monthly and pay-per-use plans compare over a year, and when it beats a bounced payment.

The short answer

Overdraft protection at TD, Scotiabank, CIBC and BMO costs $5 a month on a monthly plan or $5 each time you overdraw on a pay-per-use plan, plus interest on the negative balance. TD, Scotiabank and CIBC charge 21% a year, calculated daily. If you overdraw on fewer than 12 days a year, pay-per-use usually costs less. If you overdraw several times most months, the monthly plan costs less.

The Financial Consumer Agency of Canada (FCAC) confirmed in an October 2026 review that most banks charge $5 for both types. Without any protection, a payment that bounces can cost far more, as the numbers below show.

How overdraft fees work

An overdraft happens when your bank lets a payment go through even though your balance is too low. Your balance turns negative, and the next deposit pays it back. The FCAC describes three ways banks charge for this.

• Monthly plan. One flat fee, usually about $5, no matter how many times you go below zero that month. Some banks charge it even in months you never overdraw.
• Pay-per-use plan. No monthly fee, but generally up to $5 each time you go into overdraft. Some banks charge it at most once per business day.
• Linked account. Money moves in from your savings, credit card or line of credit, often for a $5 transfer fee. A credit card transfer counts as a cash advance, with interest from day one.

With the first two, you also pay interest on the overdrawn amount for every day it stays negative. The FCAC review puts the usual range at about 19% to 22% a year, calculated daily and charged monthly.

Overdraft fees at the big banks

Source: each bank’s overdraft protection page, checked October 29, 2026. Pay-per-use plans are not offered to Quebec residents at these four banks, and Scotiabank and CIBC do not charge the monthly fee to Quebec residents. Limits are subject to credit approval.

Some accounts include overdraft protection at no extra cost. TD charges no monthly fee on its student account or on TD Minimum accounts with a student, senior or RDSP fee rebate, BMO waives it for Premium Chequing customers, and CIBC waives it for some Tier 3 Smart Account clients. RBC offers limits of $500 to $5,000 on most accounts but lists its fees on a separate page.

Monthly or pay-per-use: the break-even

Because both plans cost $5, the choice comes down to how often you go below zero. A monthly plan charged every month costs $60 a year. Pay-per-use costs $5 per overdraft day, so it reaches the same $60 at 12 overdraft days a year. Scotiabank says its monthly fee applies even in months you do not overdraw.

Two overdraft days a year cost $10 on pay-per-use and six cost $30, well under $60. At 24 days, pay-per-use costs $120, double the monthly plan. The FCAC suggests looking back over the last few months to a year of statements to count your overdraft days.

What the interest adds

Interest is small for a quick overdraft and grows the longer you stay negative. At 21% a year, charged daily:

• $200 overdrawn for 5 days costs about $0.58 in interest.
• $300 overdrawn for 10 days costs about $1.73.
• $500 overdrawn for 30 days costs about $8.63.
• $500 overdrawn for 89 days, the longest TD allows, costs about $25.60.

Hypothetical examples. Interest is the amount times 21% times the number of days, divided by 365, before any fees.

Overdraft protection or a bounced payment

Without protection, a payment you cannot cover is usually declined. Since March 2026, federal rules cap the bank’s NSF fee at $10. The bank cannot charge it if you are short by less than $10, and it can charge only once every two business days on the same account, under the amended Financial Consumer Protection Framework Regulations. The company you were paying can still add its own fee, which the FCAC says is often $20 to $40.

The FCAC review works through a sample month. A person starts with $30, has a $50 phone bill and a $495 car payment come out before her pay arrives, and gets two $500 paycheques. Each shortfall lasts 5 days.

Source: FCAC Review of banking fees in Canada, published October 23, 2026. Both plans use 22% interest, and the no-protection fees are two $10 NSF fees plus two $30 merchant fees. Gizly reproduced the interest and balances independently.

The lesson: for an occasional shortfall, protection is far cheaper than a bounced payment. It only becomes expensive when you stay overdrawn for weeks or rely on it every month. For a longer gap, the FCAC points to a line of credit or personal loan instead. It also notes that overdraft protection may cost less than high-cost credit such as a payday loan.

Rules your bank has to follow

• Your consent. The FCAC says banks must get your express consent to add overdraft protection. You have to apply, and you must have reached the age of majority in your province.
• Low-balance alerts. Banks must send an electronic alert when your personal account balance drops below $100, or below an amount you choose.
• Disclosure. Overdraft fees, how they are charged and the interest rate must appear in your account agreement and fee schedule.
• A fee ceiling. The FCAC review links the $5 level to the Criminal Code, which treats any annual rate above 35% as criminal, and says this effectively sets the most banks can charge for an overdraft at $5.

There are limits on your side too. Your bank can lower your overdraft limit, and many reserve the right to cancel the service, sometimes without notice. On a joint account, every account holder is responsible for repaying the overdraft. Cancelling protection does not erase what you already owe.

How to choose and set up overdraft protection

1. Count your overdraft days. Go through the last few months to a year of statements and note each day your balance went negative.
2. Pick the plan. Under 12 days a year, pay-per-use is usually cheaper. More than that, choose the monthly plan.
3. Check the repayment rule. Find out how long you can stay negative. TD sets 89 days, and CIBC wants a positive balance at least once every 90 days.
4. Choose a modest limit. A limit that covers your largest regular bill is usually enough, and it keeps the debt small.
5. Switch if your pattern changes. Scotiabank, for example, lets you switch plans at any time online, by phone or at a branch.

If you are paying monthly fees on top of overdraft charges, it may be worth comparing no-fee bank accounts or trimming other costs such as ATM fees.

Frequently asked questions

• Sources, checked October 29, 2026: FCAC: Getting overdraft protection (modified 2026-10-23); FCAC: Review of banking fees in Canada, overdraft protection (published 2026-10-23); Canada Gazette Part II: SOR/2025-96, NSF charge limit; TD: What is overdraft protection; Scotiabank: Overdraft protection; CIBC: Overdraft protection; BMO: Overdraft protection; RBC: Overdraft protection.
• Method: Yearly fees are $5 times the number of overdraft days, against $5 times 12 months. Interest is simple daily interest at 21% on a 365-day year. Both were calculated in Python, and the method was checked by reproducing the FCAC sample month to the cent ($479.89 and $474.85).

Important: This guide is general information, not financial or legal advice. Fees, rates and limits can change and depend on your account and province, so confirm the current terms with your bank before you sign up. Gizly is not paid by any bank mentioned here. See our affiliate disclosure.