An unavailable funds fee is a penal
fee applied by a
bank
A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...
to a client's
transaction account
A transaction account (also called a checking account, cheque account, chequing account, current account, demand deposit account, or share account at credit unions) is a deposit account or bank account held at a bank or other financial instituti ...
when a transaction is posted to the said account that has a ''negative available balance'', regardless of if the account factually contains a ''positive physical balance''.
The fee is distinct from a
non-sufficient funds
A dishonoured cheque (US spelling: dishonored check) is a cheque that the bank on which it is drawn declines to pay ("honour"). There are a number of reasons why a bank might refuse to honour a cheque, with non-sufficient funds (NSF) being the mos ...
fee, as there is a positive physical balance but some or all the funds are
on hold (meaning that the balance is not yet available).
Bank fees such as the unavailable funds fee are contentious and have been the subject of some debate. Consumer advocacy groups have criticised them as opaque and unfair and that they particularly penalise the poor and fees do not reflect the banks' costs. The banks argue that it is a penalty, not a transaction fee. These fees have become a major source of income for banks, replacing the traditional account and transaction fees which in many countries have disappeared.
Governance
United States
Not all overspending fees are officially defined or regulated in the United States. It is up to the individual bank to decide if the Unavailable Funds Fee should be applied, instead, it could dishonour the payment to avoid a customer getting into a position where the fee applies.
See also
*
Bank charge
*
Non-sufficient funds
A dishonoured cheque (US spelling: dishonored check) is a cheque that the bank on which it is drawn declines to pay ("honour"). There are a number of reasons why a bank might refuse to honour a cheque, with non-sufficient funds (NSF) being the mos ...
References
{{DEFAULTSORT:Unavailable Funds Fee
Banking terms
Fees