Returned Check Fee [Banking Basics]

Returned check fee occurs when a recipient attempts to cash a check but there are insufficient funds in the corresponding checking account.

In this article, weโ€™ll explain everything you need to know about the returned check fee and answer common questions we receive on the topic.

This article is part of our free series on how to send and receive money, including bank checks, bank transfers, and more, which you can access by clicking here right now.

Feel free to use the table of contents to jump ahead to the sections most relevant to you.

Table of Contents

  1. Returned Check Fee
  2. Reasons for a Returned Check
  3. What Happens When a Check Gets Returned?
  4. Frequently Asked Questions
  5. Do You Want Help Opening Bank Accounts?

Returned Check Fee

Returned check fee refers to the penalty that banks charge when the issuing account does not have sufficient funds to honor an issued check. In other words, this is the cost of bouncing a check from a checking account. Not surprisingly, the returned check fee is also commonly referred to as a non-sufficient funds fee or NSF fee.ย 

Reasons for a Returned Check

The primary reason for a returned check is that there is not enough money in the issuing checking account in order to honor the payment being deposited or cashed. In other words, the individual or business that issues the check has spent the money that they committed to paying.

Obviously, this can be a simple mistake, an accident, or perhaps a mishap due to standing orders that were forgotten. However, there are other instances where checks may be refused for more nefarious reasons, which can include bad checks and fraudulent activity. Weโ€™ll discuss both of these below as well to help differentiate between a returned check and more serious concerns.

Bad Checks

While bad checks can refer to checks that do not have a sufficient balance in the corresponding account to clear, they can also refer to checks that do not have accurate information, list fake account details, and are completely fraudulent. With this in mind, letโ€™s take a close look at what fraudulent activity refers to and how banks are combating it when it comes to checks.

Fraudulent Activity

Fraudulent activity related to checks is unfortunately on the rise. This means that banks have to become more diligent in their assessment of checks. As a result, banks are more likely to reject checks or impose strict clearing procedures, especially for checks of a higher value.

Check clearing procedures allow the receiving bank to โ€œclearโ€ the check with the issuing bank, prior to releasing the funds to the depositor. This is one way that banks can mitigate the losses related to check fraud.

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What Happens When a Check Gets Returned?

When a check gets returned, what happens next is that the account holder issuing the check (individual or business) will receive a charge on their account from the issuing bank. This charge is referred to as a non-sufficient funds (or NSF) charge.

In short, an NSF charge means that the account issuing the check did not have sufficient funds in the account at the time that the recipient was going to deposit or cash the check.

In most cases, a returned check fee can be avoided by maintaining accurate records, balancing your checkbook, and always maintaining a sufficient balance in the account to cover all outstanding checks that have yet to be cashed or deposited.

Check Returned Fee

Importantly, the returned check fee is charged to and paid by the individual or business that issued the check. In most cases, the cost of a returned check fee is between USD 25 and 35, depending on the bank.

Frequently Asked Questions

Below are three of the most common questions we receive from people asking about a returned check fee. If you have further questions you would like to ask our team, donโ€™t hesitate to get in touch.

Why Am I Getting Charged a Returned Check Fee?

You are getting charged a returned check fee anytime that you do not have enough money in your bank account to cover a check that you issued. In other words, you may have issued a check believing you have sufficient funds in your account. Then you continued to spend from the account, which resulted in a bounced check. This bounced check triggers a returned check fee, which is charged to you by the issuing bank.

How Do I Stop Returned Check Fees?

To stop returned check fees, you will need to make sure that there are sufficient funds in your checking account to cover any checks that you issued but have yet to be cashed. In fact, this is the only guaranteed way to stop returned check fees.

The reason for this is that guaranteed check fees only apply when you do not have sufficient funds in your account to cover a check. So, by making sure that you do (often through balancing your checkbook), it is possible to avoid these fees completely.

Can I Get a Returned Check Fee Waived?

It is possible to get a returned check fee waived. However, it will require you to contact your bankโ€™s customer service department. Then, you will need to explain the reasoning for the returned check and request an exception. In other words, it is not common practice for a returned check fee to be waived. However, it is possible for returned check fees to be waived if you present your case correctly.

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