Debit Cards: Shop Safely and Save Money

MANAGING YOUR MONEY

by the FCAC

FCAC is a federal government agency that protects consumers’ rights, and provides useful and objective information about financial products and services.

Canadians use their debit cards frequently, for a wide range of transactions. And when it comes to fun and entertainment, using a debit card can be a fast and convenient way to pay for goods and services. In Canada, most businesses and organizations, from movie theatres to restaurants to museums to retail stores accept debit cards as a method of payment.

Debit card fees

However, it is important to be aware of the fees you may have to pay when you use a debit card. For example, when you make a purchase in a store, you may also have to pay a “convenience fee”. This is legal, as long as you can see what the fee is on the screen of the pad where you enter your personal identification number (PIN). If you do not want to pay a convenience fee, the merchant must also give you the option to cancel your transaction, at no cost. If you want to pay with a debit card, a business can require you to make a minimum purchase. For example, a store may require you to spend at least $5, for you to use your debit card. These rules are different than the rules for credit cards.

Automated banking machine fees

When you withdraw money from an automated banking machine (ABM), you might also have to pay a convenience fee. Most financial institutions charge convenience fees to clients of other banks who use their ABMs. For example, if you have an account with Bank A but you want to withdraw money from an ABM at Bank B, then Bank B may charge you a fee for this service, because you are not a client. Convenience fees (which privately owned banking machine operators started charging in the mid-1990s) can amount to more than $1.50 per transaction. When you withdraw money from an ABM you may also have to pay a network access fee as well as a regular account transaction fee. This means that you could end up paying as much as $6 in fees on top of the money you are withdrawing from your account. Just as with convenience fees for transactions in stores, banking machines will also display a message showing the amount of the fee. If you do not want to pay it, you can cancel the transaction, at no cost.

Service fees

Besides the convenience fees that you might have to pay in stores and at ABMs, you may also have to pay a service fee to your financial institution. Service fees vary depending on the financial institution, the type of account you have and the service package. Financial institutions must also make available to their clients a list of all of the service fees that apply to their account. You can ask for a copy of this list. For detailed, up-to-date information on banking packages and service fees, see The Cost of Banking Guide, which you can order, free of charge, from the Financial Consumer Agency of Canada (FCAC), or view it on FCAC’s website. The website also has an interactive tool, which you can use to find a banking package that meets your needs.

Although all of the fees we have outlined may seem like a lot, you can avoid paying them by taking a few simple steps, as follows.

How to cut your debit card fees

When you withdraw money at an ABM, you can avoid convenience fees by using your own financial institution’s ABMs.

Before making a debit card transaction, check if you will also have to pay a convenience fee. This is especially important in a restaurant, where you would usually already have eaten the meal by the time you pay for it.

Don’t hesitate to cancel the transaction if you find out that you will have to pay a fee, or if you feel that the fee is too high. You can use another method of payment such as cash or a credit card, or you can take your business to another merchant who doesn’t charge a fee.

If you can’t use another method of payment and you don’t want to take your business elsewhere, ask if you can get “cash back” with your purchase. If this is what you choose, the merchant will give you cash and will add this amount to the total you have to pay. For example, if you buy an item for $10 and would like an additional $20 in cash, the total amount charged on your debit card will be $30, and the merchant will give you $20 in cash. This will allow you to avoid going to an ABM and paying an additional fee to obtain cash.

Several financial institutions in Canada also offer single-fee service packages, which include low-cost accounts. These types of packages can help you cut down on the service fees you will have to pay. For more information on single-fee service packages and low-cost accounts, see FCAC’s publication The Cost of Banking Guide. The website also has an interactive tool, which you can use to find a banking package that meets your needs.

Debit card fraud

Although debit cards are a convenient alternative to carrying large amounts of cash, it is important to be aware of the financial risks associated with using a debit card. Unfortunately, debit card fraud is a reality in Canada, and can be quite upsetting if you are a victim.

Thankfully, Canadian financial institutions have put in place a number of measures to protect consumers, such as a code of conduct for debit cards. This code ensures that if you fall victim to debit card fraud, your financial institution will usually cover your losses if you have taken appropriate steps to protect your card and your personal identification number (PIN). Here are some steps you can take to reduce the risk of fraud.

How to shop safely

Don’t give out any more personal information than is necessary, and only share this information with companies and organizations that you know and trust. If you notice something suspicious when you make a transaction, alert the company’s head office, as well as your own financial institution, immediately.

Make sure that the banking statements you receive are accurate. Check all of your account statements to make sure that the transactions listed are transactions that you actually made, and that none are missing. Report any lost or stolen debit card to your financial institution immediately.

Cancel and destroy any cards you no longer need or use.

Choose a PIN for your debit card that will be hard for other people to guess. Don’t use personal information such as your name, address, date of birth, social insurance number or telephone number. Your financial institution might not reimburse you for the money you lose if someone guesses your PIN and uses your personal information to withdraw money fraudulently from your account.

Never write your PIN down or give it to anyone else – not even to a family member or a friend. You could be liable for any unauthorized transactions. Change your PIN often. Banks will not charge you to do this. When you make a transaction – whether it is at your financial institution, an ABM or a store – always hide the keypad with your hand.

If you are a victim of fraud

If you believe you have become a victim of fraud, contact your financial institution and the local police immediately. Make sure you keep all of the notes and documents related to the fraudulent transaction, since the police may need them in case of an investigation. You may also call Phonebusters – an anti-fraud call centre that is jointly operated by the Ontario Provincial Police and the Royal Canadian Mounted Police – toll-free at 1-888-495-8501 or e-mail them at This email address is being protected from spambots. You need JavaScript enabled to view it. . If you think that your financial institution did not respect the debit card code, contact FCAC.

To obtain more information, contact the Financial Consumer Agency of Canada, toll free at 1-866-3222. If you are deaf or hard of hearingcall 613-947-7771 or 1-866-914-6097 (toll-free).

CNM