When you first wrote that check, you didn’t realize that you didn’t have enough in your bank account to cash it. So, your check bounced.
Now, the check’s recipient can’t access the funds, at least, until you add more money to your account. You might find that the mistake has landed you with a late penalty for missing a payment deadline. And you also might find that you’re hit with an NSF fee.
What is an NSF fee, and what can you do to avoid it?
The Basics of NSF Fees
An NSF fee is a nonsufficient funds fee. Your bank will charge this fee whenever one of your checks bounces — this is because you do not have enough funds in your account to clear the check at the time it is cashed. Your bank will also charge this fee when you set up an online bill payment that does not go through — again because you do not have enough funds available.
NSF fees are often confused with overdraft fees. They are very similar. They cost approximately the same amount. The average overdraft fee is $35. According to the Consumer Financial Protection Bureau, the average NSF fee is $34. And accountholders are charged these fees when they don’t have enough money in their checking account.
The main difference between the two types of fees is whether the transaction goes through. With an NSF fee, your transaction is declined. With an overdraft fee, your transaction is allowed to go through.
You will be charged an overdraft fee when you make a transaction that is more than what’s available in your checking account. The bank will accept the transaction, even though it puts the balance into the negatives. Essentially, the bank gives the user a temporary loan to complete the transaction. The user will need to repay the bank that temporary loan in order to get their balance back into the positives. They will also have to pay an overdraft fee for the service.
How Can You Skip NSF Fees?
Call Your Bank
You can ask your bank to waive an NSF fee. If you’ve been a good customer in the past, and this NSF fee is a rare occurrence, the bank might agree to waive it this time for you. However, if you’ve racked up NSF fees in the past, they may not oblige you.
Asking for your bank to waive the fees isn’t a good solution to rely on. You should try adopting other strategies to avoid the problem in the future.
Follow a Budget
Bouncing checks could be a simple budgeting problem. Without a budget, you might spend too much on non-essential expenses and forget to leave enough in your checking account for your bills. Consider downloading a budgeting app. Most budgeting apps will sync with your bank accounts so that you can see whether you can actually afford to pay your bills and cash your checks over the course of the month.
Make an Emergency Fund
Emergency expenses can turn your budget upside down. The emergency expense falls directly into your lap, and you don’t have time to think about how you’ll scrounge up the money to pay for it. You just react, write a check to cover the expense, and think about the consequences later. This is obviously a risky choice that could land you with a bounced check and an NSF fee.
To avoid this stressful scenario, you should build up an emergency fund. You can use the savings from your emergency fund to cover an urgent expense that’s outside of your budget. Then, you wouldn’t have to tap into the money sitting in your checking account and risk an NSF fee. If you still want to write a check, you could put the emergency fund in a Money Market Account — this gives you access to a bank card and checkbook.
Without an emergency fund, you should still refrain from using the money in your checking account to cover an urgent expense — especially when your budget doesn’t have a lot of wiggle room. Instead, you could borrow funds through an online loan to cover the emergency. Find out what is an online flex loan to get an idea of the borrowing solution you could use in this situation. You could also turn to other borrowing options like personal lines of credit or credit cards.
You don’t want to collect NSF fees from your bank. So, follow these steps and do your best to avoid them.
