Having insufficient funds in a bank account is a common cause of returned payments, and it can be a costly mistake. Financial institutions typically charge returned payment fees to cover the costs associated with processing a bounced check and to make up for lost interest. As payment processing technologies have advanced, some banks have also begun charging “re-presentment fees” in addition to their returned payment fees. Re-presentment fees are charged when banks attempt to collect a payment multiple times.

The amount of a returned payment fee varies from one financial institution, credit card company, or service provider to the next. Generally, the fee is based on a flat fee plus a percentage of the amount of the payment. For bounced checks, some banks and service providers may also add a processing fee of several dollars. According to the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, credit card companies are prohibited from charging consumers more than 29 dollars as a fee for returning a payment.

In addition to their fees, banks may also choose to report returned payment fees to a credit bureau. If the fee is reported and subsequently paid, the payment may be reflected on a consumer's book of credit, which can influence a consumer’s credit score negatively.

Payment security is becoming increasingly important and fortunately, consumers have multiple payment options to protect against returned payments and the associated fees. Setting up automatic payments can help ensure that bills are paid on time and consumers can also use services like PayPal to avoid bounced checks. Returned payment fees are also an indication of how credit-savvy a consumer is, so paying bills and staying on top of payments can help consumers avoid unnecessary burden and debt.