Your Bank Account

Most of us open a bank account at some point in our lives. Learn the rights and responsibilities that come with having a bank account, and practical tips to avoid problems.

Understand your legal rights

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 set out in a written agreement. When you open a bank account, you typically sign some forms. One form is usually a signature card, so the bank has a record of your true signature. For a chequing account, you must sign a form to obtain personalized cheques. At least one of the documents you sign has the details on how the bank will operate your account.

Tip Most bank account agreements have similar terms. But there are some differences. To find out exactly what you’ve agreed to, get a copy of the agreement from your bank and read it.

Bank account service charges vary

Service charges vary between banks and accounts. Depending on your account, you may be charged for the cheques you write and for other services the bank provides. For example, if you overdraft your account (that is, withdraw more money than the account holds), you may have to pay an overdraft fee, plus interest. Or you may have to pay a service charge every time you use an automated teller machine (ATM).

Often banks have package deals with a set monthly charge for a certain number of transactions. Many waive fees if you keep a minimum balance in your account.

The bank must tell you the service charges when you open an account

Your account agreement likely doesn’t specify the service charges. But it probably says you agree to the bank's general schedule of rates, and permits the bank to debit your account for any charges the bank sets from time to time.

And when you open an account, the bank must tell you its service charges. The charges are typically listed on its website, as well. If you’re looking to open a bank account, shop around for the best account option for your needs.

Changes to service charges

Banks change their service charges periodically. If your account agreement permits, this can be done without notice to you. Even if your agreement requires the bank to notify you about changes in your service charges, the bank doesn’t need your consent to change its charges.

Overdraft services can avoid unexpected charges

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 protection, your agreement likely says the bank must honour a cheque only if there’s enough money in your account.

Overdraft protection means the bank will honour your cheque even if you don’t have enough money in your account to cover it. Overdraft protection is not automatic.

Tip Overdraft protection helps not only with avoiding unexpected charges. If you pay for something and your bank doesn’t honour your cheque because there’s not enough money in your account, your credit rating will suffer.

If you deposit an NSF cheque to your account

When someone pays you with a cheque, you deposit the cheque in your bank account. Your bank will typically credit the money to your account, and present the cheque to the cheque writer’s bank for payment. This process ideally ends with the cheque being “cleared”. But sometimes a cheque bounces. That means there’s not enough money in the cheque writer’s account to cover the cheque. The cheque is returned to your bank stamped NSF (standing for non-sufficient funds).

Most account agreements make you responsible for cheques that don’t clear

Your account agreement likely says your bank can debit your account for the amount of the NSF cheque — even if you have not withdrawn the money. That’s true even if your bank is slow and doesn’t clear the cheque promptly.

(It’s possible your bank's delay contributed to a cheque not clearing. That is, there might have been enough money in the cheque writer’s account to cover the cheque when it was written, but your bank’s delay in presenting the cheque to the other bank meant that by the time your bank did so, there was no longer enough money in the account. In such a case, you may have a claim against your bank, but even this may be limited or denied by your account agreement.)

Banks have their own policies on whether you can redeposit an NSF cheque (and if you can, how many times you can redeposit it).

An alternative to writing cheques

An electronic funds transfer (EFT) is an alternative to writing a cheque. An EFT fails immediately if there’s not enough money in an account. It removes the uncertainty that comes after depositing a cheque.

If someone uses your PIN or bank card

When you have a bank card and personal identification number (PIN), you’re responsible for all amounts withdrawn from your account through the authorized use of your card. If you lose your card or find out 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, see our information on credit cards (no. 247).

If you sign up for a joint bank account

A joint bank account allows two or more people, from the same account, to make withdrawals, deposits and payments, and conduct other transactions. As a joint account holder, you share access to the account.

You're also responsible for any transactions made by the other account holders. For example, let’s say the joint account is overdrawn — one of the account holders has written a cheque for more money than is in the account. The bank can demand payment of the overdrawn amount from any of the joint account holders. 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.

Prevent problems

Check your bank account statements carefully

In your account agreement with the bank, you likely agreed to review all entries on your account statement and advise the bank of any errors. Reviewing your statements can also alert you to important information — the first you may learn of a cheque returned NSF (non-sufficient funds) may be from your bank statement.

Point out if the bank makes a mistake

You have a certain window of time to point out a mistake made by the bank — typically 30 days from the date of the account statement. If you don't point out a mistake, you’re considered to have agreed the information shown in your statement is correct.

(There are some exceptions to this rule. For example, if someone forges your signature on your cheque. If this happens, you should immediately notify the bank and make a claim for the lost money.)

Keep your receipts

If a mistake is made by the bank, you must prove it. For this reason, always get a receipt for any deposit you make, and keep your cancelled cheques and bank account statements for a reasonable time.

If you use an automated teller machine (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. (Note that any deposits and transactions made at an ATM on a weekend or holiday are processed on the bank’s next business day.) ATM receipts aren’t considered proof of actual deposits to your account. But they are a starting point. Only a bank teller receipt or a copy of the actual deposited cheque is accepted as evidence of a deposit.

Common questions

What happens if I don’t use my account?

Under the federal Bank Act, if a bank account has been inactive for 10 years and the owner can’t be contacted, any amount in the account is considered an “unclaimed balance”. Under the law, the bank must transfer the money to the Bank of Canada. For more information on unclaimed balances, call 1-800-303-1282 or visit bankofcanada.ca.

How do I complain about my 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 at 1-800-385-8647. This office is the federal government agency that oversees Canadian banks.

If you’re still not satisfied, you can contact the Ombudsman for Banking Services and Investments at 1-888-451-4519.

[updated July 2018]

The above was last reviewed for legal accuracy by Bruce Hallsor QC, Crease Harman.

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