What Does NSF Mean in Banking? [Free Guide]

In this article, we’re answering β€œwhat does NSF mean in banking?”

In short, it refers to a fee that banks will charge anytime customers do not have sufficient funds to honor a payment.

That said, an NSF is not an overdraft fee. In fact, there are a number of unique differences that you should be aware of.

This is part of our free series on banking basics, ranging from sending a bank transfer to understanding which fees are charged, which you can access 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. What Does NSF Mean in Banking?
  2. Insufficient Funds vs Overdraft
  3. Frequently Asked Questions
  4. Do You Want Help Opening Bank Accounts?

What Does NSF Mean?

NSF means, non-sufficient funds, which refers to the fee that banks charge their customers when there is insufficient funds in their account to honor a payment. When an NSF fee is charged, it means the bank has blocked the transaction from proceeding. However, in certain instances, banks may allow the transaction to continue, which would then result in an overdraft fee being charged.

Insufficient Funds vs Overdraft

The main difference between insufficient funds and overdraft is that an insufficient funds fee (or NSF) is charged when a transaction fails and the bank blocks the payment while an overdraft fee is charged when a transaction fails but the bank still allows the payment to go through.

In other words, a NSF fee needs to be paid and you will still have an outstanding payment with the original vendor while an overdraft fee will need to be paid and the remaining balance for your original transaction now needs to be paid to the bank.

Why Did I Get Charged an NSF Fee on My Checking Account?

If you were charged an NSF fee on your checking account and you are wondering why, it’s likely because you issued a check to someone and when they tried to deposit or cash the check, you had an insufficient balance to meet the payment.

That said, an NSF fee can also occur if an electronic bill or standing order is attempted but again, you did not have sufficient funds. In both cases, an NSF fee will be charged for each transaction matching the criteria.

Do Banks Charge an NSF Fee on Savings Accounts?

No, banks do not charge an NSF fee on savings accounts. Instead, NSF fees are applied to checking accounts when checks or other forms of payment are attempted but there is an insufficient amount of money in the account to meet the payment requirement.

When arranged overdraft protection is in place on an account, an account will not receive an NSF fee. Instead, the account holder will be charged an overdraft protection fee for the corresponding charge.

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Frequently Asked Questions

Below are a few of the most common questions we receive from people asking what NSF means in banking. If you have further questions you would like answered, don’t hesitate to get in touch.

How Will I Know If I’ve Been Charged an NSF Fee?

You will know if you’ve been charged an NSF fee by your bank by reviewing your account statement, either online or in physical format. The statement will typically list NSF, along with the corresponding fee that the bank has charged. Depending on your bank this fee may range between 25 and 35 USD.

Are NSF Fees Refundable?

No, NSF fees are not refundable unless the bank makes an exception for you. That said, banks are not required to refund NSF fees. Instead, you will need to contact your financial institution and request that they make an exception. To do this, you should contact the customer service department of your bank and present your reasons why you need the refund.

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