How to avoid insufficient funds (NSF) fees

What are NSF fees? 

Fees cost bank customers and credit union members billions of dollars each year. One of the most common are NSF fees. According to the US Consumer Financial Protection Bureau, consumers paid over $5.8 billion in NSF and overdraft fees in 2023. 

NSF is a shorter way to say insufficient funds, or non-sufficient funds. Financial institutions charge NSF fees when an account holder cannot cover a payment they make using their checking account. (You may see the same fee referred to as a returned item fee.)

For example, suppose an account holder writes an $800 check but only has $700 in their checking account. Their financial institution may not process the payment and instead charge them an NSF fee. The same scenario can happen with a scheduled online payment. 

At UNFCU, the NSF fee is $25.00. If you are charged this fee, it will be listed on your statement as an “Insufficient Funds Charge.”

Ways to avoid NSF fees 

Track your spending 

One of the best ways to avoid NSF fees is to track your spending. When you understand how much you spend each month, you can better plan how much money to keep in your checking account. You can track your spending by creating a monthly budget spreadsheet or using a budgeting app. 

Monitor your checking account 

Along with tracking spending, make it a habit to review your checking account balance. Take note of which transactions have posted (been fully processed) and which are still unaccounted for. A pending automatic payment or a check you have written could mean that your balance will soon decrease. Remember, just because you have paid someone by check does not mean they will deposit it immediately. 

Set up automatic deposits 

A steady flow of money into your checking account can help ensure you are able to cover payments. If your employer offers payroll deposit, you can automatically deposit all or a portion of your paycheck or pension. 

Keep a buffer in your checking account 

Keep a little extra money in your checking account beyond what you need for monthly expenses. If you have an unexpected expense, or if you overlook a scheduled automatic payment, this can provide you with a cushion.