Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
Also known as a bounced check, a returned check is one that the bank has not honored. This is usually because there aren’t sufficient funds in your account.
Regardless of why the check was returned, you may owe a returned check fee. Let’s dive deeper into what a returned check fee is, how much it may cost you and what you can do to prevent these fees in the future.
If you write a check but don’t have enough money in your checking account to cover it, you may have to pay a returned check fee. A returned check fee is charged by the recipient of the check as a consequence for attempting to distribute funds that you simply do not have. When this happens, the recipient of the check may also be charged by their financial institution, so a returned check fee covers the merchant’s recovery costs.
In addition to the returned check fee charged by the merchant, you may also owe a returned item fee, also called a non-sufficient funds (NSF) fee, to your financial institution.
|Average Total Cost of a Returned Check|
|Fee Type||Average Amount|
|Returned check fee||$20 to $40|
If you bounce a check, the fees can add up fast. As mentioned above, the merchant could charge you a returned check fee to cover their recovery costs. There are state-specific limits to these fees, and they typically range between $20 and $40. Some states also permit merchants to charge a percentage of the check’s amount. In Ohio, for example, you could owe $30 or 10% of check amount, whichever is greater.
You also may have to pay an NSF fee to your financial institution if you wrote a check and don’t have enough money in your account to cover it. While returned check fees and NSF fees vary, their amounts are usually fairly comparable. NSF fees typically average around $30.50 according to a 2019 study by DepositAccounts.com.
Based on the average amounts charged for each fee type, let’s say the merchant charges $30 for a returned check fee and your bank charges $30.50 for an NSF fee. In this case, you may have to dish out a total of $60.50, which is a lot to pay for a returned check.
For more information on the types of fees you may be charged in the instance of a returned check, visit your bank or credit union’s website. If you don’t find what you’re looking for online, give them a call and ask for clarity.
Fees aren’t the only consequence of returned checks. You may also face the following repercussions:
To minimize the consequences of a bad check, reach out to the recipient and explain that you don’t have enough money to cover it. You can work together to come up with a solution.
While returned check fees are frustrating, there are several steps you can take to avoid them in the future. In order to do so, you will want to evaluate your banking habits and also look at any safeguards you can put in place to prevent overdrawing your available funds in the future.