What is NSF Check?

Non-sufficient funds (NSF) is defined as a term used in banking to indicate that a check can not be honored because there are insufficient funds in the account on which the check was issued. A Non-sufficient funds check is often referred to as a dishonored check, bounced check, cold check rubber check, returned item, or hot check.

 Reasons for NSF check

The primary reason for NSF check is that the party issuing the check do not have sufficient funds available in their checking account to honor the check. Other reasons include the writer of the check want to withhold payment; funds of the account holder are frozen; the account is actually non-existent due to a fake check being presented; and the check is being damaged.

Collection on dishonored checks

NSF checkThe receiver of the NSF check may choose to take legal action against the issuer. The receiver may choose civil action or criminal action depending on the NSF check amount and existing laws in the jurisdiction where such check is issued.

In the United states, a NSF check restitution program exists that allows receiver of such check to collect the amount from the local district attorney, for any amount. Then district attorney through an agency will pursue the issuer of the NSF check by trying to collect the funds in exchange for avoiding criminal action.


Following steps can be taken to avoid NSF check:

  • The checking account should always have higher balance
  • Latest and better balancing techniques
  • Overdraft protection – This will create a link between a checking account and a saving account, whenever there is NSF check, required amount to honor the NSF check will automatically transferred from saving account to the checking account. Most of the time companies have contracts with banks to take care NSF check with overdraft which will be settled within few days.
  • Use debit and credit cards instead of using checks.

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