How many NSF fees can a bank charge on a single transaction?

If you were charged more than one NSF (non-sufficient funds) bank fee for a transaction, you might wonder how many NSF fees a bank is allowed to charge.

While it’s not inherently illegal for banks to charge an NSF fee, consumers are crying foul when more than one NSF fee is charged on a single transaction.

If you have had the same electronic bill payment attempted and rejected by your bank multiple times, you could be incurring more than one NSF bank fee for that single transaction. At $30 or more per fee, your bank could be digging you into a deeper financial hole each time the transaction is attempted and there’s not enough money in your account, instigating the bank to reject the charge.

So how do NSF fees work? Essentially, an NSF fee is incurred each time a financial institution rejects a pending transaction and an electronic notification of the rejection is sent to the merchant who is expecting their money.

NSF bank fee lawsuits

Banks and credit unions have been defendants in lawsuits over allegations they charge unacceptable numbers of NSF fees for a single transaction.

In one NSF fee class action lawsuit, Digital Federal Credit Union was accused of having a “routine practice of charging two or three non-sufficient funds fees on a single transaction.”

Digital Federal Credit Union’s own documents allegedly indicate only one NSF fee would be charged no matter how many times the request for repayment was processed. If each request for repayment is considered a new, unique item, then the single NSF fee ends up equaling multiple fees for what is truly a single transaction.

In another lawsuit, USAA Federal Savings Bank was accused of breaching its contract to only charge one NSF fee for a single transaction. A woman alleged USAA charged her $29 three different times as a credit card payment was attempted multiple times.

Consumers allege banks are making extraordinary amounts of money by sometimes charging more for NSF fees than the initial amount of the intended transaction.

For example, one Bank of America customer said she was charged two NSF fees of $35 each before a transaction was covered, which also cost her an additional $35 overdraft fee. She lamented that one $20 payment towards a credit card cost her $115 total in NSF fees alone.

NSF fees are typically between $27 and $35, and are limited by a cap instituted by state law. Most states cap these fees at $20, $25, or $35, but some cap at $40 or even cap the fee at a percentage of the check amount.

On top of the risk of being unnecessarily penalized by getting hit with more than one NSF fee for the same transaction, these kinds of fees also hit the poorest American the hardest.

Banks were allowed to combine overdraft and NSF bank fee revenues into one category known as deposit service charges until 2015, according to the Consumer Financial Protection Bureau. At that time, the law changed, requiring overdraft fees and NSF fees to be tracked separately. The 2015 NSF fees totaled $11.16 billion in revenue for banks that had assets of more than $1 billion. That amount accounted for eight percent of the banks’ total net income.

The banks reported $3.87 trillion had been deposited in customer checking and savings accounts for the year ending Dec. 31, 2015.

How bank fees add up

In addition to an NSF fee, your bank also may charge you an overdraft fee. Together, the two fees could cost you $70 or more.

The overdraft fee is to cover the cost of the bank covering the money needed if your account does not have enough money in it to cover the amount of the bounced check. This overdraft protection is often around $35 per transaction, though it can skew a little lower or a little higher, depending on your financial institution or where you live.

Even if you have another savings account, line of credit, or credit card linked to your checking account in the event an overdraft occurs, the bank still may charge you a fee for the service of moving the money around from one place to another to cover the transaction amount.

The Center for Responsible Lending released a report on consumer bank fees assessed in 2019. In that report, the Center called the average overdraft fee of $35 as an “unreasonably high” figure because most customers who go into overdraft status usually do so because of a relatively small purchase amount of around $20. It’s hard for most consumers to see the justification of charging a customer $35 for the privilege of spending $20.

Research authors noted that 10 of the biggest banks in the United States collected more than $11 billion in consumer fees from their customers during 2019 alone.

In addition, the report indicates that nine percent of account holders pay approximately 84 percent of the overdraft-related bank fees, and the majority of these account holders only have an average of $350 in their account. There are a number of ways to avoid paying NSF fees, but the best way is of course to avoid incurring them in the first place.

Filing an NSF fee lawsuit

A growing number of people are filing lawsuits over NSF fees against their financial institutions, alleging the fees were unfair, excessive, or deceptive. If you have been hit with unfair or deceptive overdraft or NSF fees by your bank or credit union, you may be able to file a lawsuit and pursue compensation.

In many cases, a problem with unfair NSF fees can affect many more than one customer at a time due to issues with contractual promises the bank or credit union made to its customers as a whole.

Filing a lawsuit can be a daunting prospect, so Top Class Actions has laid the groundwork for you by connecting you with an experienced attorney. Consulting an attorney can help you determine if you have a claim, navigate the complexities of litigation, and maximize your potential compensation.

Join a Free NSF Fee Class Action Lawsuit Investigation

You may qualify to join this NSF fee class action lawsuit investigation if you were unfairly charged NSF fees by one of these banks:

• BancFirst
• Bell Bank
• Busey Bank
• Center Bank
• CenterState Bank
• Flagstar Bank
• Glacier Bank Wings Federal Credit Union
• Midwest One
• NBT Bank

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