When you write a check, you often assume the recipient will cash or deposit it and the money will be withdrawn from your account. However, a check bounces when your account doesn’t have the money available to cover the value depicted on paper. While this could happen for a number of reasons—miscalculation, forgetfulness, etc—bounced check fees are coming.
Read further to learn what a bounced check fee is, how they work, if they can be reversed, and how expensive they can get. Plus, consider steps you can take to avoid this situation in the future.
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What types of bounced check fees are there?
While bouncing a check can be both embarrassing and problematic, this circumstance comes with a number of fees, some of which you were not expecting. Generally, bounced check fees can include:
- Overdraft fees: generally $30 to $40
- NSF charges: around $30 to $40
- Merchant fees: typically $20 to $40
- Municipal fines
Yes, writing bad checks is technically a crime, but criminal charges are reserved for those who intentionally write bad checks, walking away from the debt before the victim can recover their funds—often on a massive scale.
Here, we’re talking about accidentally writing a check that bounces and the fees you’ll pay. Keep in mind, fees change from bank to bank and merchant to merchant. If you want to know precisely how much these fees will cost, review the terms of your checking account or the rules posted by the merchant.
Also, it’s advisable to have a backup savings fund that you can draw from in a situation like this. If no such funds are available, you may need to borrow from friends and family to right the ship.
What are overdraft fees?
Overdraft fees are charged when the check you wrote is honored by the bank, but its total amount pushes your account balance into negative territory. The bank must cover the deficit in your account, and this processing fee is debited as a result. Shortly thereafter, the bank will likely alert you to the issue via email, SMS, or push notification.
While overdraft fees simply push your account further into the red, you should consider contacting the bank after the issue is sorted, requesting a courtesy refund of those fees. Most banks will refund these fees one time per year. Sometimes, it will only be a one-time charge for the entire duration of the account as a courtesy to you, and the customer service associate will likely be quite demonstrative when explaining that the reversal cannot occur in the future.
What is an NSF fee?
Non-sufficient funds (NSFs) fees are charged when a check must be returned to the merchant. While the merchant has their own fee structure, the bank will charge you an NSF fee because you attempted to pass through a check that was rejected.
In this case, the bank is charging you a fee because it was forced to process the check back to the merchant. As previously mentioned, you should consider reaching out to the bank to reverse this charge.
What is a merchant fee?
Merchants expect to be paid for the goods or services they have provided. When your check bounces, they can charge you a fee because the transaction is not complete. The merchant must go back to you, request payment once again, and remain in a sort of financial purgatory until you pay them properly. As a result, you’re charged a fee—think of merchant fees like interest on a loan.
The TeleCheck database
If you bounce enough checks, you may be flagged in the TeleCheck database. This is a central hub used by many merchants to process checks, and the database keeps a record of anyone who has a history of bouncing checks.
Using this information, TeleCheck can recommend that the merchant deny your check, protecting the merchant from future losses or hassles. The TeleCheck database doesn’t charge you a fee, but it makes paying with a check more difficult. You can think of TeleCheck denials as an annoyance tax.
Worst case scenario: the bank closes your account
In an extreme “worst-case scenario”, the bank might choose to close your account after you bounce a check. You don’t want to be caught by surprise when the bank takes action faster than you have. So, when you bounce a check or you realize a check might bounce, you should try the following steps:
- Reach out to the bank to mitigate the situation
- Reach out to the merchant
- Find a way to pay the debt as quickly as possible
And most of all, avoid bouncing more checks. Carefully review your account ledger, and even ask merchants to postdate or hold checks until you know your account can cover them. Being proactive today can save you up to $100 or more in the future.