A non-sufficient funds fee or NSF is a fee charged by your bank when attempting to spend more money than what is in your account. In addition to the fee, a NSF can impact your credit. It’s important to understand how NSF fees work and how to avoid them occurring.
NSF fees vary by banks or financial institutions, but typically range between $45-$50. You may even incur a returned payment fee where the recipient’s financial institution may impose a charge too.
It is possible your bank or institution may refund or waive the NSF fee. You can ask, but there is no guarantee the fee will be refunded or waived. It is likely to be refunded the first time, but repeat occurrences are less likely to be waived.
NSF fees can impact your credit
NSF fees can negatively impact your credit score. A bounced payment is not reported to credit bureaus. But insufficient funds can result in a late or missed payment and that does appear on your credit report.
It can look like there isn’t enough money in your account to pay your financial obligations. This could lower your chances of being approved for credit.
Ways to avoid NSF fees
Use overdraft protection instead. Paying for this protection through your bank or institution could work better than incurring a NSF fee regularly.
Monitor your account frequently. Understand how much money is in your account and when specific payments need to be made.
Use alerts for low balances. Most banks or institutions allow customers to setup automatic alerts once the account balance falls below a specific number. These alerts can help you make better spending decisions.
Use a prepaid card. As you are only limited to the funds loaded on a prepaid card, it isn’t possible to overdraw and incur a NSF fee.
Essential information
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