Financial institutions must also make the first $100 of the cheque available to consumers for withdrawal.
Subject to the exceptions below, the maximum cheque hold periods are as follows:
|Maximum cheque hold periods|
|Amount of cheque||Deposit method|
(with an employee at a branch or point of service)
|Any other way
(such as at an ABM)
|$1,500 or less||4 business days||5 business days|
|More than $1,500||7 business days||8 business days|
Note: the maximum cheque hold periods shown in the table above do not include the day you deposit the cheque.
If the cheque has to be returned to your financial institution for any reason (such as non-sufficient funds, a closed account, a stop payment, etc.), your financial institution will remove the funds from your account. This can happen even after the maximum hold period on a cheque has expired.
A financial institution might hold the funds you deposit by cheque for several reasons, including:
When you deposit a cheque into your account, your financial institution sends the cheque to the cheque writer's financial institution to have the money released. Until this happens, the money is not withdrawn from the cheque writer's account.
This means that when you deposit a cheque, your financial institution cannot be sure that there is enough money in the cheque writer's account (that is, whether the cheque will “clear”).
It usually takes a few business days for the bank to ensure that a cheque has passed through the payment system and has been accepted by the cheque writer's financial institution. However, if a cheque is deposited in an automated banking machine (ABM) or during extended branch hours (evenings or weekends), clearing the cheque will take longer.
There may also be additional delays—for example, if the cheque is written on an account located in another province or country.
Depending on your relationship with your financial institution, the institution might release the funds to you before the cheque clears; but if it does this, it is effectively extending credit to you. If there is not enough money in the cheque writer's account, the cheque will be returned to your institution because of non-sufficient funds (NSF).
The process for a cheque to clear and be returned for non-sufficient funds normally takes about four or five days, provided the cheque writer's financial institution is located in Canada.
The amount of time it takes for a cheque to clear will depend on:
If the cheque writer or cheque writer's financial institution is located outside Canada, the cheque can take much longer to clear. Foreign cheques are often held for 30 days. If the cheque does not clear—for example, because of non-sufficient funds—the money will be debited from your account.
Your bank may choose to mail the cheque back to the financial institution that issued it and have it replaced by a secured method of payment, such as a bank draft or a cashier's cheque. It would then need to wait for that institution to mail the bank draft or cashier's cheque back.
Subject to the exceptions below, financial institutions must make the first $100 of all funds deposited by a cheque available to consumers for withdrawal:
If the cheque is for $100 or less, the financial institution must make the entire amount of the cheque available to consumers.
Be aware that access to the first $100 does not apply to cheques deposited by small and medium-sized businesses.
The above-mentioned maximum cheque-hold periods and access to the first $100 may not apply to:
Exceptions specific to small and medium-sized businesses only
Maximum cheque-hold periods may not apply to cheques deposited by small and medium-sized businesses that have:
When you open an account, federally regulated financial institutions must give you a written copy of their policy on holding funds that are deposited by cheque. In addition, the financial institutions must also, in each of their branches, display and make available copies of their policy on holding funds deposited by cheque.
The financial institution's policy must contain the following information:
Whether a hold will apply to your account(s) is not stated in this policy; the institution makes that decision when you deposit your cheque.
The financial institution's policy on holding funds deposited by cheque may be included in your account agreement or given to you as a separate document. The financial institution may provide this information to you electronically if you consent to receive required information in electronic format rather than as paper documents. You can also request a written copy of the policy at any time.
If you have an account at a deposit-taking institution that is not federally regulated, such as a credit union or caisse populaire, ask the financial institution about its policy on holding funds deposited by cheque.
From time to time, the financial institution may make changes to its policy on holding funds deposited by cheque. If the financial institution makes changes to this policy that result in a longer cheque hold period, it must let you know what these changes are before they apply to your account.
If the conditions outlined above have not been met, contact FCAC.
If the financial institution refuses to honour the maximum cheque hold periods or does not provide you with the first $100 of funds you deposit by cheque because of any of the exceptions noted above, the financial institution must give you a written notice of its refusal. If you do not receive it, ask for it. The bank must also tell you how to contact the Financial Consumer Agency of Canada (FCAC).
Tell the bank you want to make a complaint. By law, all banks must have a complaint-handling process. Call FCAC toll-free at 1-866-461-3222 for more information.
If you feel that a federally regulated financial institution is not respecting your rights, contact FCAC.
Contact your financial institution to find out about its policy on holding funds and the maximum amount of time it may hold the funds you deposit by cheque drawn on a foreign bank or financial institution.
In the regulations, the term “eligible enterprise” is used to refer to small- and medium-sized businesses. To qualify, a business must have:
Definition: Dishonoured cheque
A dishonoured cheque is a cheque that is not accepted by the financial institution on which it was drawn. This can happen for a number of reasons, such as: