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NSF Fees 101: A Guide to Insufficient Funds

By Brooke Vaughan // November 30, 2020

A person who writes a check with insufficient funds in their account could receive an NSF fee.

Meet the overdraft fee’s evil twin — the non-sufficient funds fee, NSF fee for short. The two look quite similar, but there are important differences between them, namely how they’ll affect you — the consumer — when you’re standing at the register expecting for your payment to go through.

What is an NSF Fee?

Banks and credit unions charge NSF fees, also known as returned item fees or insufficient funds fees, when a check bounces, or is returned, due to insufficient funds in your account. 

Checks can be returned whether you submit them to a business or to an individual. Most importantly, the bank will not cover the transaction when you get an NSF fee. For a debit card transaction, your card will be declined. When paying by check, the returned check will trigger a fee for both you and the person who attempted to deposit the check.

What is the Difference Between Overdraft and NSF Fees?

Both overdraft and NSF charges begin with you having insufficient funds to cover a transaction, and both end with a hefty charge. While banks decline transactions for an NSF fee, they spot the bill when you overdraft, sending your account balance into the negative.

When banks charge overdraft fees, they loan the funds to cover a transaction. With NSF fees, banks choose to decline the transaction, plus charge a fee — that’s where the “evil twin” bit comes into play.

Whether or not banks pick up the bill depends on:

  • The bank’s policy
  • The amount of the negative balance
  • Your history with overdraft and NSF charges
  • Overdraft protection status

Financial institutions are required to ask customers if they’d like to opt into overdraft protection when opening an account. You are not required to opt in. According to a 2014 study by the Consumer Financial Protection Bureau, opted-in accounts pay on average $21.61 per month on overdraft and NSF fees compared to $2.98 per month for accounts that aren’t opted in.

You can receive an NSF fee due to insufficient funds even if you haven’t opted into overdraft protection or have exceeded your overdraft protection limit.

Overdraft and NSF fees look similar on your bank statement, however financial institutions count them as separate fees. Since they are counted separately, you can be charged the maximum number of daily fees for both overdraft and NSF fees. You cannot be charged both fees on a single purchase.

How Much Does an NSF Fee Cost?

NSF fees average $34.21, the same as standard overdraft fees, according to Cushion’s analysis of more than one million overdraft fees.

You can rack up multiple NSF fees on one transaction. If you make a payment that does not clear your account, a bank may try to reprocess the transaction, resulting in multiple NSF charges on the same purchase.

Examples of Overdraft and NSF Fees

There are $5 in your checking account, and you attempt to pay by debit card for a $20 dinner. 

  • With overdraft protection, your bank will likely cover the transaction. With a $35 overdraft fee, your account is overdrawn by $50. 
  • If you’re not opted into overdraft protection, your card will be declined due to insufficient funds. Your bank will not withdraw any money from your account, and you’ll have to pay the check for dinner a different way.


With $5 in your checking account, you write a $20 check to your neighbor. This would be considered a bad check.  

  • With overdraft protection, your bank might cover the check and your balance will be -$50. 
  • If you’re not opted into overdraft protection, the check will bounce. You will receive an NSF fee from your bank, and your neighbor will likely receive a fee from his as well. With a $35 NSF charge, your account balance could now be -$30 or more.

Do NSF Fees Affect Your Credit Score?

Returned item fees won’t necessarily harm your credit score. However, NSF payments and bounced checks can appear on debit reports, according to Experian. Debit reports lay out your banking history for institutions to open new accounts and set your withdrawal limits.   

Tips to Avoid NSF Fees

Standing at the cash register with a declined card, there might not be much you can do in the moment aside from pay with cash or another card. However, there are things you can do to prevent future NSF charges and a few more things you can do if you end up with one. 

Keep an eye on your account balances and charges. 
Banks are not legally required to notify you when they charge fees. It may be applied and deducted from your account without you ever having known. Set up alerts to notify you when your funds are low or if you’ve overdrafted. This can typically be done within a mobile banking app. 

Reconsider your overdraft protection status. 
It can be wise to opt out of overdraft protection if you’re trying to manage your spending, but the protection can occasionally come in handy. If you write a lot of checks or have many scheduled autopayments, it might be beneficial for you to opt into overdraft protection rather than racking up NSF fees. 

There are alternate overdraft protection settings that allow you to link another bank account, such as a checking or savings account, or line of credit to cover overdrafts for a lower fee.

Read more about what to know before opting into overdraft protection here.

Request an NSF fee refund. 
You can dispute fees by contacting your bank on your own, or have Cushion handle the negotiation for you. ⚛️ Fee Genius scans your accounts regularly, catches pesky fees, figures out what is negotiable, and more. Then if you’d like us to go ahead and automatically negotiate your fees with high refund odds on your behalf, you can opt into the 💭 Fee Negotiation add-on during sign-up or from the Profile tab of your dashboard. 

Read more about how to get overdraft-related fees waived. 

Cushion helps you waste less money, save more, and live a financially healthier life. We monitor your bank and credit card accounts 24/7, find and alert you about pesky fees, let you know which fees are negotiable, which banks are cooperative, and can even automatically negotiate on your behalf.* To date, Cushion has secured customers more than $11 million in bank and credit card fee refunds—and we’re just getting started.

*Cushion only negotiates fees with high refund odds. We cannot guarantee any negotiations, a regular frequency of negotiations, or fee refunds—your bank makes the final call.