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Six tips to help avoid NSF fees

Getting an NSF (Non-Sufficient Funds) fee can sting. Here are six tips to help make sure you always have enough money to cover expenses.

September 5, 2024

Written by Maria Hyde

Illustration of a stop sign depicting the letters NSF.

Key takeaways

  • An NSF (Non-Sufficient Funds) fee is a charge that applies when you don’t have enough money in your chequing account to cover a transaction.
  • With Tangerine's no-fee daily Chequing Account, there are some built-in features to help you avoid NSF fees.
  • Some quick and easy ways to prevent NSF fees include keeping tabs on your spending, setting up real-time alerts, topping up your accounts automatically, spreading out transactions, and considering overdraft protection.

Six tips to help avoid NSF fees

They’re just three simple letters, but seeing them on a bank statement can really sting. I’m talking about the dreaded NSF fee, short for Non-Sufficient Funds. It might appear when the balance in your bank account is too low to cover a transaction.

Usually, NSF fees are charged when electronic funds transfers are rejected, pre-authorized payments are rejected, or a cheque bounces (i.e., when a cheque gets deposited but the account it's attached to doesn't have enough funds to cover it). If there are insufficient funds in an account, the bank won’t let the payment go through and will charge the account holder an NSF fee. Keep in mind that this could also trigger additional fees, such as a charge from a payee if your payment was rejected or late.

How to prevent getting an NSF fee

If you’re a Tangerine Client, you’re probably aware of the no-fee daily Chequing Account for everyday banking and the Savings Account for growing savings. You won’t pay monthly fees, but there are some instances, including NSF scenarios, when fees may apply.

Fortunately, Tangerine’s Chequing Account has built-in features to help you avoid NSF fees. Regardless of where you bank, the best thing you can do is take a few precautions for peace of mind. Here are some tips.

1. Keep tabs on your spending

Keeping a budget is a good way to stay on top of your spending. When you know how much you have in your accounts and are prepared for upcoming transactions, there’s less room for surprises, and you can feel confident about payments going through without a hitch.

If you're a fan of budgets, you’re gonna love Tangerine’s Left to Spend tool, which basically does all the work for you. Left to Spend gathers information about your income, expenses, and other transactions in your accounts, then creates a simple budget so you know how you’re doing. You’ll get an updated amount and a useful visual every time you log in, making it easy to see how much you have left to spend every month at a glance.

That way, you'll notice if your Account is getting a little low and your phone bill is due soon. Phew. You can move more money into your Chequing Account to cover the expense and avoid an NSF fee. 

2. Set up real-time alerts

Want to get updated on the go? You can set up digital nudges to keep you in the know about activity in your bank accounts.

At Tangerine, these are called Orange Alerts. You can get notifications by email or text to let you know when your Account balance is below a certain amount and when you have recurring payments coming up. This way, you get a heads-up and can plan for transactions, steering clear of NSF fees.

3. Top up your Account

Why wait for an alert? You can set up a Money Rule to automatically top up your Chequing Account when the balance falls below a certain threshold. It’s a creative and effortless way to make sure you always have money in your Account, so you don’t have to add another item to your to-do list. 

Customize your Top Up Money Rule by choosing the minimum balance amount (the default is $500). If you dip below that number, Tangerine will automatically top it up using money from your other Tangerine Account (also selected by you).

4. Spread out your transactions

Familiarize yourself with your bank’s hold policies and try to leave time between transactions. Banks may put a hold on certain deposits (such as those made by cheques, bank drafts, and money orders), and it can take some time to clear them. A hold allows banks to confirm a deposit is legitimate and that the funds are available from the other financial institution.

So, this is why giving yourself a few extra days between depositing a cheque and any bill payments is a good idea to avoid coming up short and incurring NSF fees.

5. Use your debit card to shop online

Some online shopping platforms such as PayPal allow you to pay directly from a bank account, so it's best to double-check that you provided your Client Card Number instead of your Chequing Account Number. Providing your Client Card Number means that if you don’t have enough funds in your Account for the transaction, it will be declined rather than causing an NSF fee. 

6. Consider Overdraft Protection

You can apply for Overdraft Protection to help cover occasional shortfalls in your Tangerine Chequing Account (up to an approved limit). Let’s say your Account is short of funds; your Overdraft Protection will automatically kick in so you can avoid declined transactions and NSF fees.

While you avoid an NSF fee, there’s a fee when using your Overdraft Protection — but it’s typically lower than NSF fees. It can still make sense to have the feature as a safety net to make sure your transactions go through. 

Keep smart financial habits and a positive balance 

By practicing smart financial habits and using the right tools, you can ensure your accounts always have enough funds to cover expenses. With a little planning and monitoring, you can avoid paying NSF fees and keep more of your money in your pocket. 

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