A Money Coach in Canada

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Over on Ethical Banker  Erik wrote,

    Is it ethical for Banks to let your checking account go negative in order to charge and profit from NSF fees?
From a purely business standpoint I see why this is such a profit center.  A good percentage of people get into a financial bind from time to time. Unforeseen auto repairs, medical expenses, etc… but, the extent in which the banks charge these fees can make it almost impossible to recover from a financial issue.
For instance I had an emergency medical issue which tapped my checking account.  The payment was posted to my account immediately putting me a few dollars negative.  in the next few days charges made previous to the incident began to post.  Things like a cup of coffee at starbucks, dry cleaning, etc. Small charges.  Yet I incurred a $31 NSF fee for everyone costing me an additional $310 dollars on top of the negative balance.  $310 dollars for charges totaling less that $50 dollars?  This kick them while there down philosophy  in my opinion is unethical.  What are your feelings on this issue? Are there alternatives to traditional banking?

Most readers know that as I build my money-coaching business (Your Money by Design) I work part time for Citizens Bank of Canada.  CB (as we insiders call it.  Well, I do, anyway) prides itself on its ethics, and does business only with companies that are not in the nicotene, arms, nuclear, animal testing etc. business (that still leaves a lot of scope!).

We’re owned by a credit union (VanCity) although operate completely independently, but it means we genuinely put members first.  Nevertheless, we absolutely charge NSF fees.  First, there’s an OD fee of $5.  The member has about 24 hours to get the funds in, before we send the item back NSF.  If the member doesn’t, we charge an additional $25.

Why do we charge?  Because it honestly costs us.  For each OD, a live human being has to monitor the account:  will the member get the money in?  If not, a live human being also has to get the funds back from whoever we gave them to (eg. if it was a payment to your auto-insurance, we have to electronically contact them to reclaim the funds).   Many people erroneously think this is all automated and instantaneous.  It’s not as much as we think.  There are massive regulatory and privacy requirements, so electronic data is not flying across the web like we think it may be.   There are checks, balances and a wee bit of human intervention along each step.

The case you stated seems extreme.  If a member called me and pointed out what would happen, I would likely go to the mat arguing for a refund of the majority of fees (providing it did all indeed occur in one fell swoop, rather than over a month of routine mishaps).  The fact is, NSF fees frequently do hit us when it hurts – I’ve been there!  (I’m a money coach because I took my share of lumps and bruises).  It’s easy to interpret this as the bank hitting us when we’re down.  It’s not.   It’s simply a function of reclaiming costs-of-services-provided even though the ‘service’ is reclaiming your money (you didn’t have), an unwelcome service.

About the Author

Imagine if Canadians were known for being all over their money. Engaged. Proactive. Getting out of debt. Savvy. Saving. Generous. Nancy wants to help. Nancy started her own journey with money over 15 years ago, and formed her company “Your Money by Design” in 2004 to help others along the same path. It’s not the usual financial advising/investment stuff. It’s about taking control of day-to-day finances –managing monthly cashflow effectively, spending appropriately, getting out of debt, saving. If you're ready to take control over your finances, pop by her business site, YourMoneybyDesign.com


  1. Traciatim

    Th only thing I find dishonest is the practice of ordering things to post in the largest to smallest in order to maximize fees. For instance, say you have 5 things coming out that are 300, 50, 30, 80, and 75 dollars. You have 340 in your account. They could do it 30, 50 (80), 75 (155), 80 (235), 300 (BOUNCE). Instead they do 300, 80 (BOUNCE), 75 (BOUNCE), 50 (BOUNCE) 30 (BOUNCE). If your fees are 30 dollars per NSF it will net them 120 dollars instead of 30.

    Charging an NSF for people trying to spend money they don’t have is perfectly acceptable in my book. They agreed to it when they signed up, they abide by it when they mess up. I always thought it was supposed to be a punishment for a lack of money management skills anyway.

    Maybe people should band together and put 100 bucks (or some other appropriate amount) in their accounts as a float so that they don’t bounce things. Then the banks would get their profit some other questionable way instead, they are after all in the business of making money, not helping people.


    Dec 10, 2007
  2. Adam

    Well you know when the person is not at fault, and yet both the bank and the person or organization which attempts to extract the money refuses to budge on the matter the person is forced into paying for the refusal of both sides to behave in a responsible manner. The bank knows full well that people will not take a $40 matter to small claims court due to the expense in money and time. So really the bank comes out as the winner.

    Also based on your logic why doesn’t it cost us $35 to use a teller? They must be paid to perform a variety of transactions, why aren’t banks charging their users up the wazoo there? Banks have universally sent their fees zooming into the air without any real logical explanation other than their corporate board members requiring a new additional to their large homes. Banks weren’t this bad 20 years ago, it’s a money hungry age we’re living in.


    Oct 03, 2012
  3. daveland

    “It’s simply a function of reclaiming costs-of-services-provided” what a load of shit, so then these humans who have to click the mouse button are worth $42.00 a minute??? in labour($42.00 is the standard nsf fee i am charged at my bank) because thats about how long the work you outlined would take to complete, sure maybe its not automated and kicking somone while they are down may not be totally accurate but come on these banks care nothing more than making money, and they are going to charge what ever they can get away with and apparently in my case $42.00 is the number that theyre comfortable loting at


    Nov 26, 2012
  4. dave

    The whole dabate can be solved by technology. We mostly know how NA bsanks work, look to the west, example: deutsche bank has no NSF fee. You don’t got money? Payment rejected. End of story. Thing is that tecnology has upgrade cost that would only benefit people, not banks. So north american banks convenierntly don’t upgrade. Now that I think is immoral knowing that banks stand on peoples’ shoulders and spiting down on them.


    Apr 18, 2013
  5. Here’s a scenario. I live in Vancouver, BC. Our rent for our home is $2700 per month. Ya, you heard me. $2700! How’d that for affordable family housing? We have just enough money to cover our rent. Our post dated cheques are for the 3rd. The landlord doesn’t get around to depositing the cheque until the 9th. The yoga studio that my wife goes to doesn’t withdraw her monthly fee on the 15th of the previous month. Instead, they choose to randomly withdraw it 3 weeks later. Just hours before our rent cheque goes through. Which shorts us by $100. We already have a $300 overdraft but went over that by about $96. Both banks charge us $45 each in NSF fees for a total of $90.

    Why is it that our landlord as well as the yoga studio, who both agreed to collect the money on a specific date, are allowed to break their agreement, not withdraw the money on the agreed upon day and just randomly withdraw it when it suits their convenience.

    I think this is wrong. If they miss their day, they miss it. We had an agreement. They broke it. They shouldn’t be allowed to just randomly withdraw the money when it suits them. Many people live paycheque to paycheque and yes, it does feel like being kicked when you’re down. The inconvenience should be passed on to the payee not the payer. We set up agreed dates for a reason. Because we know how much money we’ll have and when.

    Thoughts? Comments? How do we hold the Yoga Studio accountable for not withdrawing the funds when they agreed to? Our landlord? Do we even have a legal leg to stand on? We managed to get more money back into our account but 12 hours too late. Goodbye $90. I don’t think that’s fair.


    Nancy (aka Moneycoach) Reply:

    sorry missed this til now. And Yeah, that’s infuriating.
    There is a misunderstanding – individuals to whom you give post dated cheques are not obliged to cash them on that date. Rather, it simply means the funds (ie. your money) will be available as of that date … and into the future until they cash the cheque/make the withdrawal. This isn’t infinite – usually it has to be cashed / withdrawn within 6 months, after which it is considered stale dates.

    Getting dinged both ways BITES. Especially when you are on a budget anyway. Sometimes if you call your bank they’ll cut you some slack and reverse the charges. Another alternative is to use fee-friendly banks (ING is reasonable, and credit unions are typically at least a bit less gouging).

    But mostly …. gotta make it your business to totally keep an eye on it. Kinda rough when most of us have a million other things on our minds. But that’s the bottom line.


    Oct 10, 2013

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