Having non-sufficient funds (NSF) in a checking account is a common occurrence and can be quite costly. It occurs when you withdraw or spend more money than is available in your checking account. For example, if you wrote a check for $100 but only had $50 in your checking account, the balance in the account would be insufficient to cover the check.

When this situation occurs, a penalty fee is assessed to your account for the non-sufficient funds. Additionally, the bank may return the payment for which you lack sufficient funds, resulting in further penalties from the creditor or merchant. There are steps that can be taken to avoid NSF fees, such as opting for overdraft protection through a bank.

Whether you’re writing a check, using a debit card, or initiating an electronic transfer from your bank account, NSF fees can apply if the account does not hold enough funds. Such fees cover the costs associated with processing the transaction, reverse the transaction and take the punitive action incurred. Generally, the fees are between $35 and $38 per occurrence.

If you know you will be short on funds, talk to your bank before making a payment and avoid NSF fees. One option may be to borrow against a credit line or taking out a personal loan. Making a secure deposit via mobile phone can also put you back on track and save you money.

The best way to prevent a non-sufficient funds situation is to carefully monitor your bank account. With instant access to your banking information, such as online banking or account apps on a smartphone, it is easier than ever to stay current. Track your setup and budget your expenses to ensure that your funds are sufficient to cover your monthly expenses.

If you have a non-sufficient funds situation and decide to opt for overdraft protection, you may have the option of linking your checking account to another account, such as a savings account. Although you pay a fee for the transfer of funds, it is usually much lower than the NSF fee of $35 to $38. With this option, you may also get granted an increase in your overdraft limits.

Non-sufficient funds can be costly, so it’s important to monitor your account balance to avoid situations in which you can't cover your payments. If, however, you find yourself needing to opt out of paying a NSF fee, explore all your options before concluding a deal.