The Offset Phenomenon (The Case of the Disappearing Money):

Have you ever experienced going to the bank expecting to withdraw some money only to find out that there is very little if nothing left?

Of course, many of us may have experienced this. It may have been because we have forgotten a cheque or two that we have issued or a recurring automatic payment or maybe your bank just took some money out so that it can pay another account that is in default.

All contracts that you sign when opening a savings, chequing, credit card or line of credit with a financial institution has an offset clause. This that allows them to apply any funds on accounts that are in good standing against any debt that is in default.

It is because of this reason that you must to stop using the financial institution that you would do your day to day banking with if you have credit in the same institution that has been included in the Debt Settlement Program. You don’t want to be in a position where the bank has “offset” your savings or chequing account because of credit that you have chosen to stop paying.

Here are copies of Bank agreements (savings and credit card) that you enter into that shows the offset clause:

Royal Bank:

RBC Royal Bank Disclosures and Agreements related to Personal Deposit Accounts

(Page 75, B. Personal Deposit Account Client Agreement, # 17, Application of Funds)

RBC Royal Bank® Credit Card Agreement

(Page 2, Cancelling This Agreement)

TD CanadaTrust:

TD Canada Trust Financial Services Terms

(Page 7, G – All Accounts and Services, # 4)

TD Canada Trust Cardholder Agreement and Benefit Coverages Guide

(Page 7, 14. Our Rights If You Do Not Follow This Agreement, b)


CIBC Personal Account Agreement

(#15 Set-off Debts Against Accounts)

CIBC Visa™ Cardholder Agreement

(Page 12,  Visa Accounts Not in Good Standing)

Bank of Montreal:

BMO Agreements, Bank Plans and Fees for Everyday Banking 

(Page 8,  3. General Terms and Conditions)

BMO Mastercard® * Cardholder Agreement

(Page 2, #22 Cancellation of your card)

Bank of Nova Scotia:

Scotiabank Personal Financial Services Agreement

(Page 35-37, Your Payment Obligations)

Scotiabank Revolving Credit Agreement

(Page 4, Offset)

National Bank of Canada:

National Bank General Information and Agreement

(Page 13:  7. Overdraft Protection for your Transaction Accounts)

(Page 25: 10. Overdraft Protection)

Agreement Governing the use of the Mastercard™ Credit Card Issued by National Bank Of Canada

(Page 2, #8 Payment)

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