What Is an NSF Fee and What Happens If You're Charged One?

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Bank accounts keep your money safe while giving you easy and constant access to it. But what happens when you ask your bank to make a payment for which you don’t have the sufficient funds? That’s when you get tagged with a non-sufficient funds (NSF) fee.

What Is an NSF Fee?

A non-sufficient funds fee occurs when the bank finds out that there’s not enough money in a bank account to cover a transaction. One of the most common occurrences is when people write out a check, but the funds in the bank account are insufficient to cover the amount written on the check. 
When things like these happen, the bank will reject the check and charge the sourcing account a non-sufficient funds fee. While the charge might vary depending on the bank, the NSF fee is usually around $35. You might also be subject to additional fees from the party that was supposed to receive the payment; these are usually called declined payment fees.

The Difference Between an NSF Fee and An Overdraft Fee

As noted, whenever there are not enough funds in a particular account, the bank will decline the transaction altogether and charge an NSF fee. However, depending on the bank, your transaction might still be allowed to go through. In this case, you would be charged an overdraft fee instead. 
For example, imagine that you write someone a check for $3,000. At the moment of the transaction, you had those $3,000 in the account; however, after some expenses, your account turned out to be at $2,700. Therefore, when the bank tried to clear the check, it was not enough to cover for it. However, the bank still processed the transaction and gave the third party the $3,000, leaving your account at -$300 and charging you an overdraft fee for overspending. 

How to Avoid NSF Fee

Not only are these fees quite high, but they are also usually avoidable by taking some precautions. 
Budgeting. Predicting your income and expenses is always the best thing possible to avoid NSF fees. This way, you’ll know exactly how much you’re able to spend. 
Monitoring your accounts. Make a habit of checking your bank account balances regularly. This will help you identify fraudulent transactions, and it can also make you aware of regular charges like monthly subscriptions that affect your balances.
Overdraft protection. Many banks offer this useful service in which you would give your bank access to your savings account. This is so that if there are no sufficient funds in your checking account, the bank would be able to tap into your savings account to cover the transaction entirely and avoid any extra charges. 
Overdraft line of credit. Some banks allow you to apply for an overdraft line of credit. The amount for which you’re approved can be used to cover any NSF transaction, and it might also serve for cash advance purposes. 


  • An NSF fee occurs when the banks find out that there are not enough funds in a bank account to cover a particular transaction.
  • While an NSF fee and an overdraft fee work in similar ways, they are not the same. With the NSF fee, the transaction will be declined, while the overdraft fee will allow the transaction to go through but leave you with overspending.
  • NSF fees are inconvenient, to say the least, but they are also avoidable. Therefore, make sure to take the necessary precautions to avoid any extra charges. 

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