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When you don’t have enough money in your account to cover a check you’ve written, the check is rejected and “bounces” back. Bouncing a check can be embarrassing and hurt your reputation with the business or person you attempted to pay, and the financial consequences can be even more painful.
What Is a Returned Check Fee?
Bounced checks trigger their own special kind of penalty. A returned check fee (also known as an NSF fee, or non-sufficient funds fee) is charged by your bank or credit union whenever you write a check without enough funds in your account to pay the amount.
You’re charged the fee to discourage you from writing bad checks in the future and compensate the bank for the administrative work associated with returning the check.
Some merchants who receive bad checks will attempt to deposit them a second time in hopes of receiving their money. If that happens and you still don’t have enough in your account to cover the check, you’ll be charged a second returned check fee by your bank.
Median Returned Check Fees
Returned check fees vary by financial institution—and should be avoided. Any extra banking charges will make it more difficult to meet your savings goals and day-to-day expenses.
These are the median NSF fees by type of financial institution, according to the current Forbes Advisor checking fees survey:
| Median Returned Check Fees | |
|---|---|
Across all financial institutions | $12 |
Traditional banks | $12 |
Online banks | $7.50 |
Credit unions | $18.90 |
And, here are the NSF fees charged at a sampling of a dozen banks and credit unions in the U.S.:
| Median Returned Check Fees | |
|---|---|
Alliant Credit Union | $25 |
Ally Bank | $25 |
Charles Schwab Bank | $25 |
Citibank | $34 |
E*Trade Bank | $25 |
Navy Federal Credit Union | $29 |
PenFed Credit Union | $30 |
PNC Bank | $0 |
Santander | $35 |
TD Bank | $35 |
Truist | $36 |
USAA Bank | $29 |
Source: Forbes Advisor checking fees survey
Other Penalties for Bouncing a Check
If you write a check without having enough funds, you could be looking at other penalties either instead of or in addition to a returned check fee.
Overdraft Fees. When you dip your account into the red by writing a check you can’t cover, your bank might pay the amount and charge you an overdraft fee. You’ll then have to transfer funds into the account to cover the check within a certain time frame. Some banks will allow customers to overdraw their accounts up to a particular limit each day.
That might sound like a convenient account feature, but the costs can be steep. Banks charged $2.34 billion in overdraft fees during the final quarter of 2021, up from $2.32 billion a year earlier, according to S&P Global Market Intelligence.
The Forbes Advisor checking fees survey found these are the median overdraft fees.
| Median Overdraft Fees | |
|---|---|
Across all financial institutions | $24.93 |
Traditional banks | $35 |
Online banks | $25.81 |
Credit unions | $25 |
Several major banks have reduced or even eliminated their overdraft fees in recent months, meaning those median fee amounts could shrink soon.
Note that if a bank does charge you an overdraft fee for a bounced check, you won’t also be hit with an NSF fee for the same transaction.
Some banks offer free overdraft protection, which will tap into a backup funding source, like a savings account, to keep your checks from bouncing. You typically need to opt into the service and link the two accounts.
Merchant Returned Check Fees. On top of the fees charged by your bank, it’s possible a business that receives a bad check from you will charge its own returned check fee. Banks charge merchants for depositing checks that bounce, so they need to recoup those costs—and will pass them along to you.
The fees vary by merchant and by state, and they can impact your ability to write further checks at the same business. VCI, formerly VeriCheck, offers a state-by-state list of maximum returned check fees that merchants are allowed to charge across the U.S. Keep in mind that the limits apply only to businesses, not banks and the NSF fees they charge.
Limited Check-Writing Abilities. TeleCheck is a company that tracks people with histories of writing bad or fraudulent checks. If a merchant reports you to TeleCheck, you could find yourself having more difficulty paying by check anywhere the TeleCheck check acceptance system is used.
What to Do If You Bounce a Check
Once you realize you’ve bounced a check, don’t panic. Instead, take these steps to remedy the situation.
Contact your bank. Let the bank know you’ve written a check and have realized you don’t have the funds in your account to cover the transaction. You might be able to work with your bank to move money from another account to pay the check and cover any fees you’ve been charged.
Next, notify the party to whom you wrote the check. By taking initiative, you can demonstrate you’re a responsible customer and ask about ways to provide payment for the amount of the check and any returned check fees the merchant might charge.
Finally, take steps to prevent future returned checks. Ask your bank about overdraft protection and whether your checking account is eligible. Get into the habit of monitoring your balance using your bank’s mobile app, so you’ll know if you have the funds to cover a check. Sign up for account alerts to notify you whenever your balance is too low.
And if you fear you might be late with a payment as you practice more responsible check writing, let a vendor know in advance. A business might be willing to work with you so you can avoid fees and find a solution for a payment that’s slightly delayed.
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Bottom Line
Bouncing a check can happen to anyone, and the fees can easily add up. To protect your finances and your ability to write checks at your choice of merchants, don’t ever write a check when you don’t have enough money in your account; be sure to set up overdraft protection on your checking account; and be proactive in communicating with your bank and the check recipient whenever one of your checks is returned.
