What Are Nonsufficient Funds Fees?

What Are NSF Fees?

NSF fees, also commonly called insufficient fund fees, are charged when your bank declines a payment because your account doesn't have enough funds to cover a transaction.

For instance, let's say you set up autopay to pay a $100 bill every month. If the charge hits and your account has less than $100 in it, your bank could decline the payment and charge an NSF fee. Writing a check that bounces due to insufficient funds can also result in an NSF fee.

How Much Are NSF Fees?

NSF fees average $32 per instance, according to the Consumer Financial Protection Bureau (CFPB). Charges can add up quickly—especially if you have more than one declined payment a month. When a payment doesn't go through, the account you were trying to pay may also hit you with late fees, interest changes or returned check fees.

Do All Banks Charge NSF Fees?

NSF fees used to be common. But in recent years, a growing number of major financial institutions have stopped charging NSF fees altogether.

The CFPB reports that as of 2023, the annual revenue banks earned from NSF and overdraft fees had dropped by more than 50% since before the pandemic—reflecting a $6.1 billion savings for consumers.

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NSF Fee vs. Overdraft Fee

Your bank or credit union may charge both NSF fees and overdraft fees when you don't have enough cash in your account to cover a transaction. But there's a key difference between the two types of fees:

• NSF fees are only charged when your financial institution rejects a payment due to insufficient funds.
• Overdraft fees, on the other hand, are charged when the account balance is too low to cover a payment, but your bank completes the payment anyway.

Both types of fees can put your account balance into the negative. And you can sometimes be charged both an NSF fee and an overdraft fee—especially if multiple payments are happening at one time.

For example, if you bounce your rent check the same day your electric bill is supposed to come out of your account, your bank may charge an NSF fee for the bounced check and an overdraft fee to cover the smaller utility payment.

Learn more: How to Find a No-Fee Checking Account

How to Avoid NSF Fees

NSF fees can rack up quickly, but it's possible to take steps to avoid these bank fees.

• Monitor your account balance. If your bank charges NSF fees, you can avoid paying them if you have enough cash on hand to cover any paper checks you write or ACH payments. Check your balance regularly using your bank's mobile app or website to help stay on track.
• Sign up for low balance alerts. Check with your financial institution to see if they offer automatic alerts. Many banks and credit unions can alert you by text, email or through the mobile app when your balance dips below a certain threshold. For instance, you may be able to request an alert when your checking account balance drops below $100.
• Keep track of expected payments. Putting your bills on autopay can help you make on-time payments, but it can be easy to forget when the money will be taken out of your account. Add payment dates and amounts to your calendar to remind you of your balance needs.
• Time payments around payday. This is often the best time to pay bills, especially if you have direct deposit. If your due dates don't already align with the day your check hits your account, contact your creditors to see if you can select a different due date.
• Link another account. Many banks allow you to have a savings account connected to your checking account that serves as a backup when funds get low. Just be sure your linked account has enough funds on hand to provide enough cushion. You may also be able to sign up for overdraft protection.
• Switch banks. Many banks don't charge NSF fees—even if you don't have enough funds in your account to cover a check or other payment transactions. If your current bank charges NSF fees and you want to avoid them completely, consider shopping around for a new bank or credit union that doesn't charge NSF fees.

Learn more: Common Bank Fees and How to Avoid Them

Frequently Asked Questions

The Bottom Line

Getting charged a nonsufficient funds fee by your bank can be frustrating—and expensive. If you're concerned about NSF fees, creating or adjusting your budget can help you avoid low bank balances, or you can find a bank that doesn't charge NSF fees.