What Are NSF Fees and How Can I Avoid Them?

iQuanti: The last thing any bank account holder wants to see in their list of transactions is extra fees. And, especially in the case of fees for non-sufficient funds (NSF), they can sometimes be avoided. If you’ve been hit with NSF fees in the past or are looking to protect yourself from incurring them in the future, here’s what you need to know about avoiding NSF fees.
What is an NSF fee?
A non-sufficient funds (NSF) fee is a charge issued by a bank when a payment against your checking account won’t go through because there’s not enough money available. For example, let’s say you write a check for a family member’s birthday for $25. Instead of cashing it right away, they wait until the end of the month when your account is dwindling before payday. If your account doesn’t have the money available to fulfill that check, it will be returned as unpaid, and you could get hit with an NSF fee.
NSF fee amounts vary per bank but commonly range from $25 to $35. And NSF fees are slightly different than the fee assessed for an overdraft. With overdrafts, the bank accepts the transaction even though the funds are not present.
4 Ways to Avoid NSF Fees
Getting hit with an extra fee is always a stressful experience. But luckily, there are several easy ways to avoid NSF fees.
1. Leave a Cash Cushion
If you have the funds to do so, leaving an extra cash cushion in your account is the easiest way to avoid NSF fees. By keeping an extra few hundred dollars in the account at all times, you’ll ensure there’s always enough money to cover expenses that come up. If you’re writing larger checks or making bigger transactions, you may need more of a cushion than those who mainly spend smaller amounts.
2. Track Your Expenses
If you’re aware of every dollar going into and leaving your account, you’ll be able to use that knowledge to avoid NSF fees. There are plenty of budgeting apps and online tools that can help. But sometimes putting pen to paper is an effective option, too.
Write down everything you spend from your checking account and all the money coming in. This can be a quick way to recognize if you’re getting close to your account’s limit.
3. Use Notifications
Many banks now offer a notification service for your bank account. Whether it’s push notifications to your phone, texts, calls or emails, you can set up alerts for various circumstances. In the case of avoiding NSF fees, you’ll want to set up alerts when your balance falls below a certain threshold. Doing so means you’ll have time to transfer money from savings or stop the payment on an outstanding check to avoid the fee before it happens.
4. Talk to Your Bank
If your account was hit with an NSF fee but you believe it shouldn’t have been, contact your bank to dispute or try and lower the fee. Sometimes things happen that are out of our control or bad timing can get you. Especially if you’re a long-time customer, the bank may be willing to work with you to waive NSF fees and avoid putting you in a worse financial position.
The Bottom Line
The best way to avoid NSF fees is to ensure there are always sufficient funds in your account. Strategies like leaving a cash cushion, tracking expenses, and setting up alerts can help keep your account NSF fee-free. But if you do happen to get hit with a fee, it doesn’t hurt to talk to your bank and try and waive it. Any time you can save money on fees means you’re in a stronger financial position.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.
Source: iQuanti, Inc.