Understanding and Avoiding Overdraft and Nonsufficient Funds (NSF) Fees (2024)

This information is being provided to help you understand what happens if your account is overdrawn. Understanding the concepts of overdrafts and nonsufficient funds (NSF) is important and can help you avoid being assessed fees or charges.

An overdrawn account will typically result in you being charged an overdraft fee or an NSF fee. Generally, an overdraft occurs when there is not enough money in your account to pay for a transaction, but we pay (or cover) the transaction anyway. An NSF transaction is slightly different. In an NSF transaction, we do not cover the transaction. Instead, the transaction is rejected and the item or requested payment is returned. In either situation, we can charge you a fee.

Determining Your Available Balance

We use the "available balance" method to determine whether your account is overdrawn, that is, whether there is enough money in your account to pay for a transaction. Importantly, your"available" balance may not be the same as your account' s "actual" balance. This means an overdraft or an NSF transaction could occur regardless of your account's actual balance.

Your account' s actual balance (sometimes called the ledger balance) only includes transactions that have settled up to that point in time, that is, transactions (deposits and payments) that have posted to your account. The actual balance does not include outstanding transactions (such as checks that have not yet cleared and electronic transactions that have been authorized but which are still pending). The balance on your periodic statement is the ledger balance for your account as of the statement date.

As the name implies, your available balance is calculated based on the money "available" in your account to make payments. In other words, the available balance takes ACH credit transactions and debit card transactions that have been authorized, but not yet settled, and adds or subtracts them from the actual balance. In addition, when calculating your available balance, any "holds" placed on deposits that have not yet cleared are also subtracted from the actual balance.

Overdrafts

You understand that we may, at our discretion, honor withdrawal requests that overdraw your account. However, the fact that we may honor withdrawal requests that overdraw the account balance does not obligate us to do so later. So you can NOT rely on us to pay overdrafts on your account regardless of how frequently or under what circ*mstances we have paid overdrafts on your account in the past. We can change our practice of paying, or not paying, discretionary overdrafts on your account without notice to you. You can ask us if we have other account services that might be available to you where we commit to paying overdrafts under certain circ*mstances, such as an overdraft protection line-of-credit or a plan to sweep funds from another account you have with us. You agree that we may charge fees for overdrafts. We may use subsequent deposits, including direct deposits of social security or other government benefits, to cover such overdrafts and overdraft fees. For consumer accounts, we will not charge fees for overdrafts caused by ATM withdrawals or one-time (sometimes referred to as "everyday") debit card transactions.

Nonsufficient Funds (NSF) Fees

If an item drafted by you (such as a check) or a transaction you set up (such as a preauthorized transfer) is presented for payment in an amount that is more than the amount of money available in your account, and we decide not to pay the item or transaction, you agree that we can charge you an NSF fee for returning the payment. Be aware that such an item or payment may be presented multiple times by the merchant or other payee until it is paid, and that we do not monitor or control the number of times a transaction is presented for payment. You agree that we may charge you an NSF fee each time a payment is presented if the amount of money available in your account is not sufficient to cover the payment, regardless of the number of times the payment is presented.Nonsufficient Funds (NSF) Fees may also be referred to as Returned Items Fees.

Payment Types

Some, but not necessarily all, of the ways you can access the funds in your account include debit card transactions, automated clearing house (ACH) transactions, and check transactions. All these payment types can use different processing systems and some may take more or less time to post. This information is important for a number of reasons. For example, keeping track of the checks you write and the timing of the preauthorized payments you set up will help you to know what other transactions might still post against your account.For information about how and when we process these different payment types, see the "Payment Order of Items" section below.

Important Information Regarding "Decoupled" Cards

Decoupled debit cards are debit cards offered or issued by an institution or merchant other than us. As part of the issuing process, you provide the decoupled debit card issuer with the information it needs to link the decoupled debit card to your account with us. Once this is done, you can typically use the decoupled debit card as you would any other debit card. Importantly, however, while transactions initiated with these decoupled debit cards may originate as debit card transactions paid by the card issuer, we receive and process them as ACH transactions. Additionally, you need to refer to your agreement with the decoupled debit card issuer to understand the terms of use for that card. Thus, when our documentation refers to "debit cards," "everyday debit card transactions," or "one-time debit card transactions," we are referring to debit cards issued by us, not decoupled debit cards issued by other institutions or merchants. Different payment types can use different processing systems and some may take more or less time to post. Knowing which card you are using and how the transaction is processed can help you manage your finances, including helping you to avoid overdraft or NSF fees.

Balance information

Keeping track of your balance is important. You can review your balance in a number of ways including reviewing your periodic statement, reviewing your balance online, accessing your account information by phone, or coming into one of our branches.

Funds Availability

Knowing when funds you deposit will be made available for withdrawal is another important concept that can help you avoid being assessed fees or charges. Please see our funds availability disclosure (generally titled, "Your Ability to Withdraw Funds") for information on when different types of deposits will be made available for withdrawal. For an account to which our funds availability policy disclosure does not apply, you can ask us when you make a deposit when those funds will be available for withdrawal. An item may be returned after the funds from the deposit of that item are made available for withdrawal. In that case, we will reverse the credit of the item. We may determine the amount of available funds in your account for the purpose of deciding whether to return an item for insufficient funds at any time between the times we receive the item and when we return the item or send a notice in lieu of return. We need only make one determination, but if we choose to make a subsequent determination, the account balance at the subsequent time will determine whether there are insufficient available funds.

A Temporary Debit Authorization Hold Affects Your Account Balance

On debit card purchases, merchants may request a temporary hold on your account for a specified sum of money when the merchant does not know theexact amount of the purchase at the time the card is authorized. The amount of the temporary hold may be morethan the actual amount of your purchase. Some common transactions where this occurs involve purchases ofgasoline, hotel rooms, or meals at restaurants. When this happens, our processing system cannot determine thatthe amount of the hold exceeds the actual amount of your purchase. This temporary hold, and the amount chargedto your account, will eventually be adjusted to the actual amount of your purchase, but it could be three calendardays, or even longer in some cases, before the adjustment is made. Until the adjustment is made, the amount offunds in your account available for other transactions will be reduced by the amount of the temporary hold. If oneor more transactions are presented for payment in an amount greater than the funds left after the deduction of thetemporary hold amount, you will be charged an NSF or overdraft fee according to our NSF or overdraft fee policy,which may result in one or more overdraft or NSF fees. You will be charged the fee even if you would have hadsufficient funds in your account if the amount of the hold had been equal to the amount of your purchase.

Payment Order of Items

The order in which items are paid is important if there is not enough money in your account to pay all of the items that are presented. The payment order can affect the number of items overdrawn or returned unpaid and the amount of the fees you may have to pay. To assist you in managing your account, we are providing you with the following information regarding how we process those items. We encourage you to make careful records and practice good account management. This will help you to avoid creating items without sufficient funds and potentially incurring the resulting fees.Note that items may not be processed in the order they are received.

Our policy is: Items without check numbers pay first (including ACH items and debit card transactions); then items with check numbers pay in check number order (lowest to highest).

Understanding and Avoiding Overdraft and Nonsufficient Funds (NSF) Fees (2024)

FAQs

What is the difference between overdraft fees and NSF fees? ›

An overdraft fee may be charged by a bank when it temporarily covers transactions that overdraw your account, allowing one or more to clear. An NSF fee is what some banks impose when they decline payments or the cashing of checks that would bring the account to a negative balance.

What are nonsufficient funds NSF fees? ›

Banks charge NSF fees when they return presented payments without payment, like a check, and overdraft fees when they accept and pay the checks that overdraw checking accounts.

How to get rid of NSF fees? ›

You may be able to get an NSF fee refunded by asking your bank to reverse the charge. Whether or not your bank complies largely depends on the financial institution and your account history.

Why should I be worried about overdraft fees? ›

Overdraft fees occur when you don't have enough money in your account to cover your transactions. The cost for overdraft fees varies by bank, but they may cost around $35 per transaction. These fees can add up quickly and can have ripple effects that are costly.

Does NSF affect credit score? ›

An NSF fee itself doesn't affect your credit score, but not having enough money in your account can mean missing a payment, which does.

What happens when you get NSF? ›

NSF fees are charges when a payment can't be processed because you don't have enough money in your account. If your bill can't be paid, or your check won't clear, the transaction won't be approved and you'll get charged because of insufficient funds.

What is an example of an overdraft fee? ›

You're $25 short, but the bank loans you that $25 and the payment clears. Now, let's say the bank charges a $30 overdraft fee. That $30 fee, plus the $25 overdraft, would leave you with an account balance of -$55.

Why are banks ditching overdraft fees? ›

Since excessive overdraft fees can get in the way of building wealth, Phillips sees the trend of banks removing them as a positive and inclusive move for more consumers to establish and maintain their financial security.

How do I ask my bank to waive overdraft fees? ›

Call your bank.

Contact your bank as soon as you realize you've been charged an overdraft fee. You can call the number on the back of your debit card to speak with a representative, who may be able to help.

How do I avoid bounced check fees? ›

The best way to avoid overdraft and bounced-check fees is to manage your account so you don't overdraw it. your check register up-to-date. Record all checks when you write them and other transactions when you make them. And don't forget to subtract any fees.

What is the difference between overdraft and non-sufficient funds? ›

Generally, an overdraft occurs when there is not enough money in your account to pay for a transaction, but we pay (or cover) the transaction anyway. An NSF transaction is slightly different. In an NSF transaction, we do not cover the transaction.

What does it mean when a check says nonsufficient funds? ›

What are Non-Sufficient Funds? Non-sufficient funds, or insufficient funds, is a banking term used to indicate that the checking account does not have sufficient balance to cover a transaction or payment. Colloquially, NSF checks are also called “bounced” or “dishonored” checks.

When you post a nonsufficient funds NSF check, you will? ›

When you post a nonsufficient funds (NSF) check, you will: add the amount of the NSF check back to the patient's account.

Can you freeze your bank account to avoid overdraft fees? ›

You can only make deposits in a frozen account. Most banks have some way of freezing an account to stop fees -- if you quit using the account.

How do I stop my bank from charging my overdraft fees? ›

You can contact your bank to find out how to revoke consent. Your decision to revoke your consent does not require that the bank waive or reverse any overdraft fees already assessed on your account, but it will prevent any future fees for one-time debit card transaction overdrafts.

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