Cashing a cheque

From: Financial Consumer Agency of Canada

Access to the first $100

Financial institutions must make the first $100 of all funds you deposit by a cheque available to you right away. If the cheque is for $100 or less, the financial institution must make the entire amount of the cheque available to you.

The first $100 must be available to you:

  • immediately if you deposit the cheque in person with a teller, or bank employee, at one of the financial institution's branches or other locations where you can open an account
  • on the business day after the day of the deposit if you deposit the cheque in any other way, such as at an automated teller machine (ATM), using a mobile device

Exceptions for access to the first $100 for small and medium-sized businesses

Access to the first $100 deposited by cheque does not apply to cheques deposited by eligible enterprises, such as small and medium-sized businesses.

An “eligible enterprise” means a business with:

  • authorized credit of less than $1 million
  • annual revenues of less than $50 million
  • fewer than 500 employees

Holds on cheques

When you deposit a cheque at a financial institution you may have to wait a certain amount of time to access the money. This is called a hold on a cheque.

A financial institution may hold money you deposit by cheque to:

  • make sure that the person or company who wrote the cheque has enough money to cover it
  • make sure that the person or company who wrote the cheque has not put a stop payment on it
  • check the details with the cheque writer to make sure that it has not been altered
  • make sure that the account on which the cheque was written is still open and has not been closed

Instead of using cheques, consider having deposits made to your account electronically. This may let you access the funds you deposit right away.

Maximum cheque hold period

There is a limit to the amount of time a federally regulated financial institution, such as a bank, can place a hold on money you deposit by cheque.

Federally regulated financial institutions can hold the money you deposit by cheque for 4 to 8 days. The amount of time depends on the amount of the cheque and how it was deposited.

These limits apply as long as the cheque is:

  • in Canadian dollars
  • drawn on an account from a financial institution’s branch within Canada
  • paper-based, which includes cheques deposited using a mobile device
  • encoded with magnetic ink used for the line of special numeric characters across the bottom of the cheque
  • not damaged and a processing machine is able to read it

If you have an account at a provincially or territorially regulated financial institution, such as a credit union or caisse populaire, ask about its policy on holding funds deposited by cheque.

In some cases your financial institution may release the money to you before the cheque clears. If the financial institution does this, it's actually extending credit to you.

This means that if the cheque does not go through, you may need to pay back the amount of the cheque that was deposited to your account. If you don’t have enough money to cover the amount of the cheque then you might go into overdraft. This could cost you more money.

Table 1: Maximum hold periods for cheques issued in Canadian dollars from a financial institution in Canada and access to the first $100
Amount of cheque

Deposited in person
(with an employee at a branch or point of service)

Method
(such as an ATM)

Access to the first $100 deposited by cheque
$1,500 or less   
4 business days after the day of the deposit 5 business days after the day of the deposit
  • immediately, if you deposit the cheque in person with a teller or bank employee
  • on the business day after the day of the deposit, if you deposit the cheque in any other manner (for example, ATM or mobile deposit)
  • if the cheque is for $100 or less, you must receive the entire amount
More than $1,500 7 business days after the day of the deposit 8 business days after the day of the deposit
  • immediately, if you deposit the cheque in person with a teller or bank employee
  • on the business day after the day of the deposit, if you deposit the cheque in any other manner (for example, ATM or mobile deposit)
  • if the cheque is for $100 or less, you must receive the entire amount

Maximum hold period for cheques drawn on banks outside of Canada

If the cheque writer or cheque writer's financial institution is located outside Canada, the cheque can take much longer to clear.

Financial institutions often hold foreign cheques for 30 days. If the cheque does not clear, your financial institution will withdraw the money from your account.

Your financial institution may choose to return the cheque to the bank 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 send the bank draft or cashier's cheque.

Exceptions to the maximum cheque hold periods

The maximum cheque hold periods may not apply to:

  • an account that has been open for less than 90 days
  • a cheque that has been endorsed more than once
  • a cheque that is deposited six months or more after it was dated
  • a cheque that isn't issued in Canadian dollars
  • a cheque issued from an account at a bank branch outside of Canada
  • a deposit that a financial institution has reasonable grounds to suspect is being made for illegal or fraudulent reasons
  • a cheque that isn't encoded with magnetic ink to allow character recognition
  • a cheque that is damaged

Exceptions to the maximum cheque hold periods for small and medium-sized businesses

Small and medium-sized businesses and other eligible enterprises have the same exceptions to maximum cheque hold periods as those outlined above.

In addition, maximum cheque hold periods may not apply to these businesses if they have:

  • a negative change in their credit score
  • an increase in their overdraft balance that isn't being reduced by deposits received
  • an unexplained change in the history of cheques being deposited to the account
  • high numbers of cheques returned due to dishonoured cheques
  • a notice of bankruptcy or creditor action against the business

Counter-signed cheques

A cheque can be cashed by someone other than the person named on the front of the cheque if they counter-sign it.

Check with your financial institution to find out if they accept counter-signed cheques. Not all financial institutions accept them.

Dishonoured cheques

A dishonoured cheque is when the cheque doesn't go through and can’t be paid.

Reasons for a dishonoured cheque may include:

  • non-sufficient funds (NSF) in the cheque writer’s account
  • irregular signature, that is, if the signature the cheque writer signs on the cheque differs from the sample signature in the financial institution
  • a difference between the amount written in words and the one in numbers

Information you must receive about cheque hold periods

A federally regulated financial institution, such as a bank, must give you a written copy of its policy on cheque holds when you open an account. You can find the policy as part of your account agreement or as a separate document.

The cheque hold policy tells you how long the financial institution can hold the cheques that you deposit.

It must include information about:

  • the maximum length of time it may hold funds for a cheque that is drawn on an account at a financial institution in Canada
  • the maximum amount of time it may hold the funds you deposit from a cheque that isn't subject to the legislated maximum cheque hold periods

If the policy does not specify if a hold applies to your account(s), your financial institution decides when you deposit your cheque.

You may also choose to receive a financial institution’s cheque hold policy electronically.

Changes to your financial institution's cheque hold policy

Your financial institution may change its policy on holding funds deposited by cheque. It must let you know what these changes are before applying them to your account.

If you get a regular statement in the mail, your financial institution must send you (or the person you choose to receive this information) a written notice explaining any change in its policy on holding funds deposited by cheque. It must do so at least 30 days before applying the change to your account.

If you carry a passbook that you present to the financial institution when you make a transaction, your financial institution must display, in your branch, a notice explaining the change in its policy. It must do so for at least 60 days before applying this change to your account.

Making a complaint about your financial institution

If the financial institution refuses to honour the maximum cheque hold periods, or doesn’t allow you to withdraw the first $100, it must give you a refusal letter. If you don’t receive the letter, ask for it. The letter must tell you how to contact the Financial Consumer Agency of Canada (FCAC) if you wish to file a complaint.

If you have a concern about a hold, discuss it with your financial institution.

If you’re unable to resolve the issue, file a complaint with your financial institution.

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