If you write a check or pay a bill electronically from your checking account but do not have sufficient funds to cover that check, you will be charged a non-sufficient funds (NSF) fee which often ranges from $20 to $30, depending on your bank or credit union. In addition, the person you gave the bounced check to will likely incur a fee that they will pass on to you. One bounced check can easily end up costing you $30 to $50. Have several NSF checks, and you could be looking at several hundred dollars worth of check bouncing charges.
To avoid wasting your money paying these fees, take these steps:
- Balance your checking account regularly. In the beginning, you may need to balance your checking account every few days or every week. It may help you to order duplicate checks so you always have a copy of every check that you write. You may want to pay your bills manually rather than have them set on automatic electronic payment until you are more in control of your money and are not bouncing checks.
- Enroll in a NSF coverage plan at the bank. With this type of plan, the bank will let a check with non-sufficient funds go through. You will still need to pay a fee for bouncing a check, but you will avoid having to pay the fee for the person to whom you wrote the check. Some banks also charge a fee for each day your account is overdrawn.
- Link your accounts. If you have multiple accounts with your bank or credit union, some will allow you to link your accounts. Then, if you have NSFs in your checking account, the bank can access the money in your savings account to cover the money you need in the checking account.
- Link your credit card to your checking account. Some banks also give you the option of linking your credit card to your checking account. Then, if you have non-sufficient funds, the bank will take the money from your credit card. This will result in a cash advance from your credit card, which often carries a hefty interest rate, sometimes as much as 20 to 25%, so you will want to pay this off as quickly as possible.
If you bounce one check, don’t feel too bad. Almost everyone who has had a checking account for a long time has bounced one check.
However, if you make a habit of bouncing checks, not only are you incurring needless penalties for bouncing checks, but you risk having your name put in the ChexSystems, which could eventually make it difficult for your to keep your bank account or open a new one. In addition, if you don’t resolve the issue of bouncing checks quickly, you could face criminal charges.
One bounced check is not serious, but doing it repeatedly is. Take the time to learn how to manage your checking account now and to make sure you make enough money to cover your expenses, so you don’t bounce checks.