What is the difference between Overdrafts and Non Sufficient Fund Fees?
Bank fees are expensive. Some people are moving banks mainly because of Overdrafts and NSF- Non-Sufficient fund fees. That why its important to know what these fees really means so we would know how to avoid them and get away from them.
Some people are thinking that Overdraft fees are Non-sufficient fund fees are the same. Overdraft fee is a very common fee for Americans. These are fees assessed by banks whenever the account goes below zero when a transaction post in an account. These fees are caused by debit card over-usage, chargeback to merchant, merchant error, intentional fraud, unexpected electronic withdrawals, temporary deposit holds, even bank error-in very minimal cases. Overdraft fees are easier to avoid compared to NSF Fees since this are usually caused by small transactions such as Starbucks, 7-Eleven, Walmart or any other store. We just have to control ourselves and avoid using our card whenever we see that we don't have enough funds.
We might be thinking that all the fees that asses in our accounts are Overdraft fees. But, not all fees are overdraft fees but the most uncontrollable fee that can surely give us pain in the ass is the Non-Sufficient Fund Fee. NSF is a term used by banking industry. We get this fee whenever we had a return item. These can be check, automatic draft or ACH, recurring card payment- if the transaction amount is to high (but sometimes still depends on the bank if they ill cover the transaction). People who are use to writing checks are prone to this kind of fee specially when they don't have extra funds to use as buffer in their accounts. If you know you don't have that buffer then there's no reason for you to miscalculate the account because you will surely get this fee. Overdraft Protection will be very helpful as well since these transaction are unpredictable and can post at any time.Loan payments that usually processed by Loan Sharks are also prone to these kind of fees because these Loan Sharks (that's why they are called loan sharks) will keep on processing your payment off your account even if you have notified them that there's no enough funds to cover.
Now we know the difference between these two fees so it will be more easy for us to avoid them. Its amazing how banks can really get great earnings just because of fees. The best thing we can do now is to manage our account better and be smart in writing checks, making a purchase or processing an automatic draft.
