Your payment might be returned unpaid by your bank to your credit card lender for a few reasons. Insufficient funds, account closure, or cancellation of the check are a few situations that could explain why your payment was returned. The payment won’t process correctly if you accidentally enter your payment information incorrectly when you pay online or by phone, and you could be charged a returned check fee for this mishap as well.
How Returned Check Fees Work
Your returned check won’t be reported to the credit bureaus if you make good on the payment, so your credit score won’t be impacted. The missed payment will go on your credit report and could impact your credit score, however, if 30 days pass after your due date, and you still haven’t made that payment. You might receive a higher “penalty” interest rate as well if the lender lets you keep your credit card account open. The lender might well turn the matter over to a collection agency or take you to small claims court if you don’t make up the payment at all, and that will show up on your credit report and affect your score.
How to Avoid Returned Check Fees
You can avoid a returned check fee by ensuring that you have enough money in your checking account to cover the payment before you make it. Be sure to balance your checkbook to take into account any transactions that might be debited from your account in the next few days. Monitor your checking account closely after you’ve mailed your credit card payment to make sure your balance can cover the payment when it’s presented. Verify that you’ve entered all information correctly when you’re paying online via the credit card issuer’s website, even if it means pulling out a physical check to confirm your checking account information.
How Much Do I Have to Pay?
Your credit card issuer might charge your account upward of $30 if you issue a check that’s returned for insufficient funds. American Express, for example, charges $38. Keep in mind that your bank will probably charge you an overdraft fee or nonsufficient funds (NSF) fee as well, so you can add another $25 to $35 to what the returned check will ultimately cost you. You might be able to have the fee waived or reversed if it was a one-time incident and your account history has always been positive. Call the customer service number on the back of your credit card, explain the situation, and ask that the fee be waived as a courtesy.
