NSF fee stands for non-sufficient funds fee, which is a fee charged by banks anytime a check bounces.
In this article, we’re going to discuss the different reasons why non-sufficient funds fees might be charged and how they can impact your credit.
Of course, we will also be answering common questions that we receive from our members on the topic.
This article is part of our free series on sending money, including the ultimate guide to bank checks, which you can access here.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- NSF Fee
- Are Non-Sufficient Funds (NSF) Fees Bad for Credit?
- Frequently Asked Questions
- Do You Want Help Opening Bank Accounts?
NSF fee is a check bouncing penalty that a bank charges the party issuing the check anytime a check is bounced for insufficient funds. This non-sufficient funds (NSF) fee is one of several bank account charges that account holders should be aware of when issuing checks, especially if a check is at risk of not being fulfilled.
Are Non-Sufficient Funds (NSF) Fees Bad for Credit?
No, non-sufficient funds (NSF) fees are not bad for credit. This is because bounced checks, which trigger non-sufficient funds, are not reported to credit bureaus.
On the other hand, if the check to pay an expense that reports to a credit bureau did not process correctly, then a negative impact on a credit score is possible.
However, it’s important to note that in this scenario the fee is not specifically bad for credit. Instead, it would be the late payment resulting from the bounced check.
Why Do Banks Charge an NSF Fee?
Banks charge an NSF fee to discourage their customers from writing checks that they cannot cash and to offset related expenses.
For example, depending on the specific payment that bounces due to insufficient funds, the bank may face charges for receiving and processing the cancelled check or the returned payment.
In most cases, the fees range between USD 25.00 and USD 35.00. However, it’s important to note that the specific fee charged can vary widely by bank.
These fees can still apply if you choose to endorse a check to someone else and the check is bounced.
Are Fees for Non-Sufficient Funds (NSF) Legal?
Yes, non-sufficient funds (NSF) fees are legal. They are in the terms and conditions of your account upon opening.
If you do not have a copy of the terms and conditions that you agreed to during account opening, you can request it directly from your bank. There you will find the specific fees that you have agreed to pay in relation to your account listed, including the non-sufficient funds (NSF) fee.
What Happens If I Don’t Pay the Fee for Non-Sufficient Funds (NSF)?
If you don’t pay the fee for non-sufficient funds (NSF), it is likely that the bank will add additional late fees to your account. Further action will then be taken if the payment is not settled, which will likely include an account closure and transfer of your outstanding payments to a collections agency.
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Frequently Asked Questions
Below are a few of the most common questions we receive from people looking into non-sufficient funds fees. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
Are NSF Fees the Same as Bank Overdraft Fees?
No, NSF fees are not the same as bank overdraft fees. While non-sufficient funds (NSF) are the result of a failed payment due to insufficient funds, bank overdraft fees refer to fees from a successful payment that is over the account balance.
Can I Get an NSF Fee Waived?
Yes, an NSF fee can get waived. However, it is unlikely in the case of repeating occurrences. Instead, it is more likely to be waived if it is the first time that the account holder had a bounced check. In either case, in order to request that a fee get waived, the account holder will need to contact their bank’s customer service line and request an exception.
How Do I Get Rid of an NSF Fee?
In order to get rid of an NSF fee, you will need to contact the customer service line at your bank. You will then need to speak with a representative and explain the circumstances leading to the fee. Importantly, if you have had repeated non-sufficient funds fees, it is unlikely that the bank will waive the fee.
Can an NSF Fee Be Refunded?
Yes, an NSF fee can be refunded. However, it requires that the bank’s customer service department makes an exception and waives the fee. In order for this to happen, the account holder will need to make a formal request. To do this, they should contact customer service and explain the situation.
Why Are NSF Fees So High?
NSF (non-sufficient funds) fees are high in order to discourage individuals from issuing checks when they have insufficient funds to meet the check payment amount. Likewise, banks incur costs when processing returned checks, which are then offset by these fees.
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