Skip to Main Content

Dishonored payment fee

Dishonored payment fees occur when you don’t have enough funds. Bankrate explains.

What is a dishonored payment fee?

A dishonored payment fee, also known as a returned payment fee, is the charge that a person receives when she attempts to make a payment but doesn’t have enough funds to cover the cost. Such a fee may be levied by an organization the person is trying to pay for services rendered when the organization is unable to charge her credit card or cash a check she gave them.

Deeper definition

If someone pays a company and the company is unable to withdraw the funds from that person’s bank or charge her credit card on time, the company may tack on an additional cost. These costs are called dishonored payment fees, and they are meant to cover the company’s own bank fees and the loss of its liquid funds. The dishonored payment fee seeks to reimburse the company for these costs and discourage customers from making payments that they don’t have the money to cover.

Dishonored payment fees may run between $10 and $35.

Such fees occur sometimes happen when the customer believes that it is better to make the payment anyway so as to avoid a late fee, interest costs, or a negative mark on her credit report. The customer may still have to pay late fees or interest in addition to the dishonored payment fee.

The bank may return the customer’s payment even when she has sufficient funds in her account if she provides incorrect or incomplete bank account information.

Always have money in the bank for your payments with a great checking account.

Dishonored payment fee example

Some examples of organizations that charge dishonored payment fees are those that provide a service, such as a lawyer or doctor’s office. Government organizations, like the Department of Motor Vehicles, also charge returned payment fees. People are also charged dishonored payment fees when paying utility bills, if the check doesn’t clear or the bank when payment is scheduled, as well as payments to credit card bills for the same reason.

More From Bankrate