Is There a Limit on Flagstar Bank NSF Charges?

Flagstar Bank says that it will only charge five overdraft or non-sufficient fund fees in a single day, but they may sometimes go back on these promises.

What are NSF Fees?

Non-sufficient fund (NSF) fees are a type of fee charged when a check or recurring transaction cannot be covered due to the low balance in an account. NSF fees are also commonly referred to as returned item fees.

NSF fees may cost a consumer between $27 and $35, but can quickly add up if a bank tries to process a transaction. State laws limit the amount that can be charged for a single NSF fee. Several states cap a single NSF fee at $20, $25, or $35. Delaware and Mississippi have higher caps, each at $40 per fee. Some states take a different approach, limiting an NSF to a maximum percentage of the check amount.

While single NSF fees are limited, some customers may find themselves hit with more than one of these fees for the same transaction.

After a transaction is denied, banks may have a policy of attempting to process it again around three times. This can quickly add up to over $100 in NSF fees which can be a serious financial burden for consumers. What makes matters worse is that most often, these fees have the most severe impact on the Americans who can least afford them.

How Are NSF Fees Different From Overdraft Fees?

NSF fees are different from overdraft fees because NSF fees are associated with a rejected transaction. Overdraft fees are not associated with a transaction failure. Instead, these fees are charged when the bank allows an account to go negative in order to cover a transaction. NSF fees, by contrast, are charged when a transaction doesn’t go through after a bank decides not to cover an overdrawn transaction.

This can occur for several reasons, such as after writing a check in excess of your available balance—colloquially referred to as “bouncing a check.” NSF fees are legal, despite no opt in.

Can I Avoid NSF Fees?

It can be hard to avoid excessive fees charged by your bank but keeping a sharp eye on your finances can be one way to minimize these fees. If you are aware of your account balances and proactive about making sure that your transactions and recurring costs are covered by your funds, you may not see as many fees being charged to your account.

Keeping an eye on account balances has become easier with the rise of banking technology. Online banking makes it easy for consumers to check how much money they have in an instant. Some banks also offer low balance alerts, where they send an email or text message when an account drops below a pre-determined threshold.

You can also avoid excessive fees by looking for banks that have fair fee disclosures and good reviews. If a bank routinely charges their customers excessive NSF fees, there will likely be consumer forums complaining about the issue.

Is There a Limit on Flagstar Bank NSF Charges?

Flagstar Bank’s fee disclosures reportedly promise consumers that, although they reserve the right to charge multiple fees in a day, they “will not charge you more than five combined Overdraft Charges and Non-Sufficient Funds Charges per day.”

Despite these assurances, consumers have reported that Flagstar Bank has unfair fee practices. On the website My Bank Tracker, consumers have left repeated negative reviews in regard to the fees charged by the company. Customers claim that the bank routinely posts transactions and holds in ways that result in exorbitant fees.

“I refuse to deal any longer with thieves,” one consumer wrote after allegedly experiencing deceptive transaction reordering.

Another consumer writes that he experienced a low balance after losing his job, but had overdraft protection on the account. The day before he was set to get his first check from his new job, the customer said he used his overdraft fee protection for $60. This allegedly resulted in $618 in fees.

Companies and banks have even agreed to pay into settlements to resolve claims that they charged unfair NSF fees. In December 2019, Ent Credit Union – a Colorado Springs-based credit union – agreed to resolve a class action lawsuit that they charged excessive overdraft and NSF fees.

“We are truly sorry for the inconvenience this has caused our members and are grateful to both our members and their attorneys for bringing it to our attention,” CEO Chad Graves said in a statement. “While we believe our member agreement allowed for the charges in question, the way the fees were assessed isn’t consistent with our values, nor were they policies we would have ever intentionally created.”

According to the credit union, the excessive fees primarily stemmed from software issues. At the time that the class action lawsuit was filed, these problems were reportedly unknown to Ent.

“That’s why we are refunding all the fees in question, plus interest, to members affected over the course of the past three years,” noted Ent.

The exact terms of the settlement are confidential to the financial institution and the settlement credit union members.

Attorneys are investigating a variety of banks and credit unions for allegedly charging unfair NSF fees to their customers. In addition to Flagstar Bank, some of these financial institutions include: Bancfirst, Bell Bank, Busey Bank, Center Bank, CenterState Bank, Glacier Bank Wings Federal Credit Union, Midwest One, and NBT Bank. If you were charged excessive NSF fees by these or other banks and credit unions, you may have a legal claim.

A growing number of consumers are choosing to pursue litigation against their banks and credits unions over deceptive or unfair practices, including over unfair overdraft and NSF fees.

If you believe you have been hit with unfair NSF fees by your bank or credit union, you may be able to join this free class action lawsuit investigation and pursue compensation.

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
• Hudson Valley Credit Union
• Midwest One
• NBT Bank

Learn More