Non-Sufficient Funding Fee, commonly known as NSF Fee, is charged when your checking account does not have enough money for purchases or payments made by you. After knowing what is NFS fees, you must know to avoid them. This purchase or payment can be with a debit card or check, and instead allows the purchase to pass through; The bank will reject it and charge you a fee. This is also known as the returned item fee.
Overdraft fees are the same, but they occur when the bank allows the transaction, even if not enough to cover your account balance. It is like an emergency short-term loan from a bank, and it comes at a cost. The bank will charge you an overdraft fee, plus you will have to pay the remaining balance. The balance of overdraft fees and losses is taken from the first deposit you made after the overdraft.
Both types of fees can be expensive, each as high as $ 35. If you overdraft your account often, these fees may increase. Also, consider that when you have a low balance in your account, it is probably the worst time for you to pay unexpected fees. This is why it is important to understand what you can do to avoid these situations.
Best Practices To Avoid NSF And Overdraft Fees
- Use direct deposit if your employer offers it to your checking account as a way to get your paycheck faster. This way, you are less likely to be in a situation where you overdraft your account because you do not yet have time to deposit your salary.
- Always keep track of the balance in your checking account. It may seem old-fashioned to keep a checkbook register, but it is the best way for you to know how much money you have available at any given time. Electronic bill payments can take up to several days to return and even longer to clear a paper check. Note them in your checkbook register with ATM withdrawals and debit card transactions. Then check your balance before making a purchase or write a check to make sure you have enough money to cover it.
- Get out of overdraft protection with courtesy and instead your bank has linked your checking account to the savings account in the bank by you. Then instead of paying the difference and charging you a hefty fee, your bank will transfer the money from your savings account to cover the purchase and charge you a small fee.
- Do not use your debit card to buy a car, buy gas, or check into a hotel. Each of these merchants will often hold on to your account for an amount, which is much more than what you actually spend. Your account may be accidentally terminated due to hold because you were not aware that money was not available to spend on the hold.
- Keep a buffer in your checking account at all times. Even keeping a minimum $ 100 account balance when you spend a little more than planned, you can prevent triggering an overdraft. Just be sure to consider the last $ 100 unavailable. If your balance falls below that amount, quickly deposit money to get back up to $ 100.
- If your checking account balance falls below a specified amount, your bank will notify you, so set an alert. If you receive notifications on your phone, you can quickly adjust your spending to avoid creating an overdraft and charges on your account.
- Manage joint accounts carefully and consider separate accounts if you cannot coordinate your spending habits. If one of you is making a purchase then the other is not aware of it, this can easily trigger an overdraft. You may be better off with separate accounts until you can agree to track your purchases and maintain clear communication about joint account balances and scheduled payments.
- If you trigger an overdraft, deposit the money in your account as soon as possible to pay the fee and get a positive balance again. Some banks may charge you a negative balance for each day, or another large fee if your account has a negative balance for several days in a row after an overdraft.