Financial Literacy

What happens to your money when you go to jail?

By: Lisa Coxon on August 17, 2023
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This article has been updated from a previous version. 

Take a second to think about how you do your everyday banking. It might involve opening an app on your phone, entering your credentials, and paying bills. For others, it might involve physically visiting a branch and having the teller do the work. Whatever your preference, you have control over your bill payments and quick access to your money. 

But once someone is sentenced to either a provincial or federal institution, they lose the ability to do either of these things. Inmates in correctional institutions aren’t allowed to keep their credit or debit cards with them. Amber Kellen, director of Community Initiatives at the John Howard Society (JHS) of Toronto, a not-for-profit organization committed to reforming the criminal justice system, explains that many don’t have key pieces of information that would allow them to bank, such as transit numbers. 

“They don’t have access to their cell phones either,” she says. “So, people who store all of that information on their personal phones wouldn’t have access to it.” 

What happens to your bank account when you go to jail? 

To find out how, if at all, inmates can manage their money from jail or prison, distributed a survey to a small sample of clients at JHS Toronto.  

Respondents’ answers were telling: many had no chance to notify their bank or any other creditors that they were being or had been taken into custody, which caused their accounts to fall into arrears. Many were unable to manage their money while in custody; and, upon release, faced financial obstacles like not being able to get approved for credit. 

No chance to notify 

When someone is taken into custody or sentenced to jail, they often don’t have the chance to let their banks or other creditors know. 

“Unless they’re out on bail,” says Kellen, “There would be no opportunity.”  

Eighty-six per cent of respondents stated that they were unable to notify their bank or other lenders that they were in custody before it happened and 92% said they were unable to notify their bank or other lenders once they were in custody. 

Kellen adds that people inside are very dependent on friends and family to be able to make those calls and connections to their banks and credit card companies. If they don’t have a friend, family member, or other sort of representative managing their money on their behalf, then their accounts can fall into arrears.  

Respondents were also asked what happened to their finances as a result of being taken into custody and 69% said their finances fell into arrears, which means missed payments and the financial product they hold (credit card, line of credit, mortgage, etc.) being closed or cancelled.  The remaining 8% represents a single respondent involved with the provincial system, who said they did their own banking (and did not reveal any more particulars.) 

Andrew Morrison, a spokesperson for the Ministry of Community Safety and Correctional Services (MCSCS), points out that in the provincial system, the average length of stay is only about 45 days, and this respondent’s most recent stay was only a month. So, it’s likely that not enough time elapsed for money management and personal banking to become a major obstacle in the case of this particular respondent. 

‘Banking’ behind bars 

When in jail or prison, inmates enter a much more restricted world of personal finance. When we asked JHS clients if they were able to bank while in custody, 83% of respondents answered “no.” 

This begs the question: how do inmates pay their bills? 

Banking takes on a whole different form in jail. Every purchase, deposit, and transfer must be done in accordance with specific directives. 

In the provincial system, inmates have just one account, called a “trust account.” 

“This money may be used by the inmate to purchase canteen items while in custody,” Morrison explains.  

If they’re admitted into custody with money, they’ll have that money placed in the trust account. Similarly, any money inmates receive while in custody (either via mail or when someone brings money when visiting them) gets deposited into this account as well. When they’re released from jail, MCSCS withdraws the funds and hands it over to the inmate.  In the federal system, Correction Service Canada (CSC) manages inmates’ money “in trust” using the Inmate Accounting System Replacement (IASR). Inmates don’t have access to this system. 

Under the IASR, each inmate has a “current” account and a “savings” account. Money in the current account can be used to buy non-health related items from the canteen (like clothing and arts and crafts materials), buying personal property, family assistance, and temporary absences (which can be granted for things like community service work), medical examination or treatment, contact with family and attending to legal matters, among others.  

Savings funds, which must remain at a minimum of $80, can be used for things like paying legal fees, supporting an inmate’s family, or using the telephone. 

According to a Toronto Star article, every time an inmate makes a phone call from a federal correctional facility, it costs $1.50, even if all they do is get an answering machine.  The article states that an inmate’s mother estimates that she spends $300 a month to talk to him on the phone. And because inmates are not allowed cash, all transactions must be made using either the IASR or the canteen point-of-sale (POS) system, which withdraws the money directly from the inmate’s current account. When an inmate wants to buy something, though, they have to first fill out an Inmate Purchase Order Form. 

Similarly, when federal inmates want to move money around, say, from their savings account to their current account, they need prior approval from the institution, which then does it on their behalf. 

One aspect of banking in prison that is similar to the outside world: federally sentenced inmates are given bank statements every month. 

Earning money in jail or prison 

In the provincial system, sentenced inmates can choose to participate in a correctional facility work program, but they don’t get paid for their work. “An inmate may be entitled to income from external lawful sources while in custody,” explains Morrison. 

In the federal system, sentenced inmates get a living allowance based on several factors, including how financially responsible they demonstrate themselves to be, whether they’re eligible for alternative income sources, and a demonstrated motivation to finding employment, a willingness to participate in a correctional program, among others.  

They can also earn money on work release or while on conditional release, from a third party for work performed in an institution, an inmate-operated business that’s approved by CSC, selling hobby crafts or custom work, and by receiving an ongoing income from a private or government source. However, both provincial and federal inmates stop receiving the GST/HST credit if they go to jail or prison for 90 consecutive days or more. 

Ninety per cent of a federal inmate’s income, after deductions, is deposited into their current account. The remaining 10% goes into their savings account. Inmates can also work in the institution’s food services, grounds and building maintenance departments. But payment for work is scant, with inmates earning between $5.25 and $6.90 a day, according to the CSC’s communications advisor Marie Lécuyer. 

The compensation an inmate receives is based on how engaged they are in their own rehabilitation. That includes how much progress they’ve made in meeting the objectives of their correctional plan, how much time they’ve spent participating in correctional programs, and how accountable they’ve proven themselves to be. Pay levels are reviewed at least once every six months. 

“Outside money from your personal bank account can be brought into the institution either through cash or cheque,” says Lécuyer of the federal system. “Cash would be deposited in your IASR current account quickly, but a cheque would need to clear, so a delay of up to one week could be possible.” 

Family members can also transfer money to an inmate as long as it’s coming from a verifiable source (i.e., not proceeds of crime). This money would go into an inmate’s savings account. 

Financial setbacks upon release 

Managing money from jail or prison is extremely challenging, but offenders face even more obstacles once they’re released. 

Applying for credit, for instance, becomes very difficult, as does obtaining proper personal identification documents, such as a driver’s licence and health card.  

The survey revealed that the top barrier inmates faced upon release was trouble getting approved for credit (e.g., obtaining a credit card, loan, or mortgage), followed by trouble finding housing and employment. Results also showed that many wind up couch surfing, living in a shelter or respite centre, or on the street. 

“The majority of clients that we serve, particularly coming out of the provincial justice system, are homeless upon release,” says Kellen. “So, one of the main things that we do is try and help individuals access housing. That’s almost always the first step.” 

When inmates leave a provincial or correctional institution, they don’t leave with a great shot at financial prosperity.  Their economic mobility is stunted, and their chances of obtaining any form of credit or even opening a bank account are slim. 

Many return to a world in which they now have to start over again. 


We received 14 responses, and for the purposes of this article, all percentages are reflective of only the number of responses received for that specific question and not of the total number of survey participants.