What Is a Returned-Check Fee?

Understanding returned check fees.

A returned-check fee is a charge applied by a person or a company when a check is dishonored and returned as unpayable by the bank because of insufficient funds, closed account or check cancellation.

Reasons

Checks are commonly returned because of insufficient funds, closed account, or check cancellation. Other reasons include unsigned check, check forgery and nonexistent account.

Returned-Check Fee

Returned-check fees vary among companies and generally range from $10 to $35 for each check that is returned as unpaid. Typically, most companies will charge the same amount their banks charge them for returned checks. In addition, the payer's bank might also charge an insufficient fund fee and/or late fee to the payer's account.

Prevention

The best way to avoid returned-check fees is to manage and keep track of your checking account by keeping it up to date. Record all checks and debit transactions, and remember to subtract any automatic bill payments and fees. You can check your balance and find out which payments cleared by calling your bank, by online banking or at an ATM.

References

• Consumer Bad Credit Guide: Preventing Overdrafts and Bounced Check Fees