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Charges For Checks Paid Against Insufficient Funds
by Andy Zavoina, BOL Guru
BIO AND CONTACT INFO
Question: When the order of processing the payment of checks is largest item first, should all checks paid be charged an overdraft charge? For example: An account has a beginning balance of $500.00, 4 items are posted in the amounts of $525.00, $75.00, $50.00 and $25.00. I think the account should be charged for four insufficient funds fees. Currently, we return the $525.00 check and pay the other three checks. Only $525.00 check is charged a fee and the other checks are paid with no fees.
Answer: With a beginning balance of $500, the first check is processed and returned in the amount of $525. An NSF fee is charged. The other items would pay and no fee would be owed.
If, as a courtesy, you typically pay customers $25 into a negative balance, you could pay the item, add your NSF fee and return the other 3 items, each with a fee.
First published on BankersOnline.com 10/14/02
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