You’ve probably heard that not-so-pretty term “bounced check” –– when you write a check that you don’t have the funds to cover. When that happens, the check is returned to your bank or credit union, and you’ll likely be charged a returned check fee, also known as a nonsufficient funds (NSF) fee. These can be up to $50 and can be charged by your bank and the check recipient.
When you write a check you don’t have the funds for, it will be returned to your financial institution unpaid ––and you’ll likely be charged a returned check fee, also known as a NSF fee.
Unfortunately, the recipient may also be charged a fee by their bank for attempting to deposit a bad check. That’s why the payee may also charge you a returned check fee for what it cost them in the process.
On average, a returned check fee (or NSF fee) can range anywhere from $10 to $50, although several big banks like Wells Fargo, Bank of America, Citibank and Capital One have made changes to their returned item policies, some fully eliminating this fee altogether.
If your bank allows a payment to go through that overdraws your account, you may be charged an overdraft fee. But you typically won’t be charged overdraft fees in addition to NSF fees. Overdraft fees are generally around $35, and if your account remains overdrawn for several days, you can be charged for that too (i.e. extended overdraft fees). According to the most recent data from the Consumer Financial Protection Bureau (CFPB), these fees cost Americans around $15.5 billion back in 2019.
Tip: A returned check fee and overdraft fee can be charged each time the recipient tries submitting it, so move quickly to resolve it.
There are a few other repercussions you could run into outside of fees:
You may be able to avoid these consequences by settling the payment or explaining to the payee why you’re struggling to pay it. Together, maybe you can work something out.
It’s easy to panic, but there are a few things you can do to quickly handle a bounced check.
To avoid these NSF fees in the future, ensure your checking account has sufficient funds to cover the payment. A good way to do this: balance your checkbook (or checking account). This way, you’re aware of any future transactions that may cause your account to go into the red.
Opt into overdraft protection with your bank. Some offer free services in which you can link your checking account to a savings account. If you do end up in a similar situation, the money can be pulled from savings –– you avoid bouncing the check and getting penalized with NSF and overdraft fees. Lastly, keep your eye on your account throughout the month. Before submitting any payment or check, make sure you’ve written or typed everything accurately.
A returned check is when you’ve written a check you can’t pay for. The check is returned to the bank, and you’re charged a returned check fee or a nonsufficient funds (NSF) fee.
An overdraft fee occurs when the bank allows the payment to go through despite insufficient funds. An NSF fee occurs when the bank rejects the payment.