Do Banks Automatically Resubmit NSF Checks?

A non-sufficient funds (NSF) check occurs when a check writer’s account lacks enough cleared funds to cover the amount of the check they issued. When a bank receives such a check, it will typically return it unpaid.

Understanding Non-Sufficient Funds Checks

Non-Sufficient Funds (NSF) occurs when a bank account lacks enough money to cover a payment. The bank will refuse to honor the check, marking it as NSF or “bounced” and returning it unpaid.

This differs from an overdraft, where a bank might cover the transaction despite insufficient funds, often for a fee. With an NSF check, the transaction is rejected and does not go through. The bank attempts to process the check, identifies the lack of funds, and returns it to the payee’s bank.

Bank Practices for Check Resubmission

Bank policies regarding the automatic resubmission of NSF checks vary significantly. Some banks may attempt to process a returned check multiple times, while others may not resubmit it at all. Generally, if a bank does resubmit, it might do so once or twice within a specific timeframe, such as a few days or weeks after the initial attempt fails.

There are no universal laws dictating how many times a check can be resubmitted; this decision largely rests with the bank and the payee. The payee’s bank often determines whether to resubmit it, potentially influenced by the payer’s bank’s reason for the initial return. Some services exist that can automatically convert returned paper checks into electronic transactions for re-presentment, timing submissions to increase the chance of collection.

A check can potentially be presented a total of three times: once as the original paper draft, and then two more times electronically. Each resubmission attempt can incur additional fees for the check writer if it continues to bounce.

Financial Consequences for Account Holders

An NSF check carries financial repercussions for both the check writer and the recipient. For the check writer, the most immediate consequence is the NSF fee, also known as a bounced check fee or returned item fee, charged by their bank. These fees typically range from $20 to $40 or more per returned item, though some banks have eliminated or reduced them.

In addition to their own bank’s fee, the check writer might also be charged a fee by the payee’s bank for the returned deposit item, which can range from $10 to $19. This fee is often passed back to the check writer. Repeated NSF incidents can lead to more severe consequences, including the possibility of their bank closing their account. Information about account closures due to repeated overdrafts or returned checks can be reported to ChexSystems, a consumer reporting agency. A negative ChexSystems report can make it challenging to open new bank accounts for up to five years.

Navigating an NSF Check

When an NSF check occurs, prompt action can help mitigate negative impacts for both parties. For the check writer, immediately adding sufficient funds to their account is important to cover the check if it is resubmitted. They should also contact the payee to explain the situation and arrange an alternative payment method. It is also advisable for the check writer to communicate with their bank to understand their specific policies regarding NSF checks and associated fees.

For the recipient of the NSF check, contacting the check writer promptly to arrange for an alternative payment is important. They should also inquire if and when the check might be resubmitted. Checking with their own bank about policies for returned items and potential re-deposit options is also practical. Maintaining open communication between all parties can facilitate a smoother resolution and help avoid additional fees or misunderstandings.