The returned check fee is a financial penalty imposed by the credit card institution or another company when the check you wrote for payment is returned by your bank without being cleared. This usually happens because your account does not have enough funds to cover the amount due.
How does the returned check fee work?
The returned check will not be reported to credit agencies if you pay the outstanding amount, so your credit rating will not be affected. However, the lost amount will be recorded in your credit report and may affect your credit rating if 30 days have passed after the due date and you have not settled it.
You may also receive a higher “penalty” interest rate if the lender allows you to keep your credit card account open.
How to avoid returned check fees?
You can avoid returned check fees by ensuring that you have enough money in your checking account to cover the amount before making a payment. Make sure to balance your checkbook to account for all transactions that may be deducted from your account in the coming days.
Monitor your checking account closely after sending your credit card payment to ensure that your balance can cover the amount when submitted.
Verify all the information you entered when paying online through your credit card issuer’s website, even if it means pulling a paper check to confirm your checking account information.
How much should I pay?
Your credit card institution may charge you up to $30 if you issue a check that is returned due to insufficient funds. For example, American Express charges $38.
Check your credit card terms to know the exact fees and penalties related to returned payments.
Keep in mind that your bank may also charge you an overdraft fee or an insufficient funds fee, so you can add $25 to $35 to what the returned check will ultimately cost you.
You may be able to waive or reverse the fees 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 request the fee to be waived as a courtesy.
Source: https://www.thebalancemoney.com/what-is-a-return-check-fee-on-a-credit-card-960749
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