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Student Dilemma: OSAP Cheque Being Held

2 February 2012

As some people might remember, just over a month ago I had some issues depositing a cheque into my bank account; in my opinion TD was wrongfully holding my cheque. I did get the money deposited, but it was a lot more of a hassle than it should have been.

That being said, it came to my attention from a friend of mine that when he went to deposit a cheque, she was told that it had to be put on hold, regardless of who it is from.

Now, I say, “who it is from” because it was not an issue of whether the account sees a lot of cheque deposits or not, or the history on the account. It was more on where the cheque was coming from.

Who was the cheque from?

The cheque was from none other the Ontario Student Assistance Program (OSAP). My friend was confused to say the least; not only has she deposited OSAP cheques in the past, but the hold were being placed on a government cheque.

After hearing that her OSAP cheque was being held, only one thing came to mind as to why this could happen; and that is cheque fraud. I can only imagine how many cases their could be; realistically not many people would contest a government cheque.

I decided to ask a bank employee about this case, and he explained that it is common for cheque fraud to occur on those kind of cheques, and it is common practice to hold the cheques.

Now if this was me, I would have not allowed my money, which is going towards my education to be put on hold; realistically, why should I be forced under scrutiny for a cheque from the government because other people might be committing cheque fraud.

On a side note, the bank that my friend banks with is none other than TD; I found it funny how my friend is also facing some problems with TD like I did.

What could you do to avoid your OSAP cheques form being held?

The solution to avoiding your OSAP cheques from being held is to have it directly deposited into your bank account.

This way, your void any potential fraud issues with your bank, as your OSAP will not come in a cheque form.

For anyone looking to have direct deposit for their OSAP, you will need to show the financial aid office your bank information so that they can direct deposit your funds into your bank account.

What do you think of OSAP cheques being held?


About the Author


My favorite weapon of choice is the samurai sword. I use it to cut my chicken during dinner, cut my hair and periodically carve my name into stone when I am bored. I love meditating on top of a 15ft high pole and eating those sushi’s with smoked salmon on top. I love everything there is about Canada and everything financially related to Canadians. I write deily posts from Canadian Banks to Credit Card information.

Comments (8 )

Sugar Free ALoe Wrote:

sometimes you can’t help the government sending you cheques instead of of direct deposits. i know friends who always tried to do direct deposit to avoid delay and hassle, but for some reason they would still receive it in cheque form every now and then

Sensei Wrote:

Even after setting up direct deposit, your friends still receive delays? That is interesting, you would think that it would be an easier system to work with. I have no clue why your friends would still receive their OSAP in cheque form, but at least they receive the money sooner or later.

Bank Guru Wrote:

A lot better then no money at all…

Jeff Wrote:

You need to find another bank.

TD trusts no one.

You’re young, and going to school, starting off your financial life. Why deal with a bank that is treating you like a criminal? OSAP cheques are not going to bounce! I would have taken that cheque, and your business to RBC tout-suite!

If this is how your TD relationship is starting, get out now!

Jeff Wrote:

Banks get a cheque fraud list each and every week. If there was an issue, they would have a list of the fraudulent cheque numbers.

If the bank was concerned in any way, a good bank would have made a quick call to the issuing bank, the issuing bank would confirm the funds are available and that there are no stops on the particular cheque number you are holding.

If there was any fraud issue, a fraud report would be sent to the banks by the local police department as well.

Find another bank, possibly the one that issued the OSAP cheque in the first place. I’m surprised TD didn’t offer you a student line of credit in the meantime (a sneaky way of getting business)

TD has a horrible reputation in Canada and the USA. I don’t understand why people keep banking with them.

Sensei Wrote:

I wouldn’t go as far as to say switch banks, but I mean realistically I do not see a government cheque bouncing but I can see them being wary of fraud. Which makes sense on the hold as well, but I still do not see what they expect to happen, it isn’t like the money wouldn’t be in your account anywhere or you be held responsible if it was a fake.

Doug Wrote:

Although OSAP cheques may be issued by an agency of the Ontario provincial government and, I would agree, are unlikely to bounce due to insufficient funds, there could be fraudulent cheques issued or there could be a stop payment on the cheque.

Unfortunately, for clients with no or poor credit history, which is the main factor in determining one’s ‘access to deposited funds’ limit (sometimes called a ‘hold’ limit or a ‘cashback’ limit), is credit score (or ‘beacon’ score). Is it fair? Probably not. However, it’s what we have. Why are (most) provincial welfare & disability cheques and federal government cheques not held? The reason is because they have indemnity agreements that will indemnify the banks who, while adhering to certain cheque cashing procedures, negotiate certain government cheques that turn out to be fraudulent or have a stop payment (in other words, the government takes the loss, not the banks). This means that certain government agency-issued cheques (common ones like ICBC and WorkSafe BC here in BC) are NOT covered by those indemnity agreements and may be subject to holds.

That said, depending how well the bank knows you, how much you have on deposit and so forth, you may find a CSR that will deposit the cheque for you with no hold. Your best bet is to ask.


Heather Wrote:

The reason that some government cheques are cashed without a hold is that Finacial institutions are required to cash all yellow federal government cheques up to $1500 without holding. Anything else regardless of where it comes from (osap, welfare, disability) they are not required to cash. Even though the osap cheque will not bounce because it is from osap does not mean that the cheque is legitimate it may be fraudulent.

Also, most institutions will not call another bank anymore. (some will in small towns) but most do not anymore. Because a bank cannot guarantee anything. Yes the cheque maybe ok at the time of the call but by the time it goes through the clearing process ( a few days later) it may not be. so it is a not a matter of a “good bank” And the CSR will be the one who is responsible for it ( not financially but professionally) When a cheque is returned the csr who cashed it gets look at. It is their responsibility to do due diligence on all cheques.

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