Definition
A fee charged when a check or electronic payment bounces because the account lacks the money and the bank returns it unpaid. It differs from an overdraft fee, where the bank covers the shortfall; with NSF, the payment fails and the payee may add its own returned-payment fee.
Why it matters
NSF fees stack on both sides: the bank charges you, the biller charges you, and the payment is still owed, sometimes with a late fee on top. A small checking buffer and low-balance alerts prevent the whole cascade.
Example
A $220 utility autopay hits an account holding $180. The bank returns it and charges a $30 NSF fee, the utility adds a $25 returned-payment fee, and the bill is still due: a $40 shortfall just cost $55 in pure fees.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.