NSF fees: What they are, how they work and how to avoid them (2024)

FAQs

NSF fees: What they are, how they work and how to avoid them? ›

An NSF fee is what some banks impose when they decline payments or the cashing of checks that would bring the account to a negative balance. Bankrate's 2023 checking account survey found the average overdraft fee to be $26.61, and the average NSF fee to be $19.94.

NSF fees, sometimes called overdraft fees, are charges for going below a zero balance in your bank account. For example, if you have $100 in your bank account and spend $150 with your debit card, you would be overdrawn by $50. Many banks allow overdraft transactions but charge a fee for the service.

Banks charge NSF fees when you don't have enough money in your checking account to cover a payment, whether from a bounced check or a denied electronic bill payment. For example, let's say you've set up automatic bill pay with your telephone provider.

Yes, the bank can assess a fee if a check overdraws your account (known as a non-sufficient funds [NSF] fee), as long as this practice was previously disclosed. Read your deposit account agreement for information about your […]

Bank policies vary, but an NSF fee can often be waived through an NSF reversal after the fact, especially if it's the first time that it's been assessed. Calling the bank's customer service line and requesting a refund is the best course of action for a consumer.

Are NSF fees refundable? Banks don't have to waive or refund NSF fees. But it doesn't hurt to ask if your financial institution will refund an NSF fee — the bank may be willing to work with you. Some institutions even have programs in place that waive fees if you meet certain conditions.

Among the 75 banks earning the most overdraft/NSF fee revenue in 2021, 95% of NSF fee revenue has been eliminated. CFPB estimates that, as a result of the elimination of NSF fees at these banks, consumers are saving almost $2 billion annually on a going forward basis.

Being charged an NSF fee on its own doesn't affect your credit. But certain consequences of being overdrawn might. For example, if it causes you to be late with or miss a payment, say on an auto loan, that information may be reported to the credit bureaus and become part of your credit reports.

Yes, you can file a lawsuit against a bank based on their overdraft fees. Consumers should have the ability to sign up for a checking account that offers reasonable and clear bank overdraft fees.

How to avoid returned deposit fees? ›

An NSF fee is what some banks impose when they decline payments or the cashing of checks that would bring the account to a negative balance. The average overdraft fee is $26.61 and the average NSF fee is $19.94, Bankrate recently found.

In early 2022, Capital One became the first large bank to eliminate all overdraft fees and non-sufficient fund fees, in a move that may protect itself from any forthcoming scrutiny from the Consumer Financial Protection Bureau (CFPB).

When you open a checking account, you may want to ask a representative, “What's the most I can overdraft my account?” and “How much overdraft can I get? Each financial institution sets different limits which can range from $100 to $1000.

You have insufficient funds

You might have money in your savings account, but the checking account or money market account you're withdrawing funds from has a negative balance. You can check your debit card balance over the phone, at the ATM, online, or in person at your bank.

1. If you have recently funded your account, it's possible that the funds did not fully clear into the account when you attempted to make a payment. 2. If you are using overdraft or credit facilities on your account.

As soon as you see an overdraft fee on your account, check your bank's website for instructions on requesting an overdraft fee waiver or refund. If there are no instructions online, call customer service, politely explain your situation, and be prepared to provide supporting documentation.