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LogoutNon-sufficient money and overdrafts are two distinct terms that both refer to a cash shortage and might result in penalties. When banks return given payments (such as checks), they charge NSF fees, and when they accept checks that overdraw checking accounts, they impose overdraft fees.
Consider this scenario: you have $100 in your checking account and want to make a $120 transaction with an automated clearing house (ACH) or electronic check payment. If your bank refuses to cash the check, you will be charged an NSF fee as well as any fines or costs imposed by the vendor for returned checks.
If the bank accepts the check and pays the vendor, your checking account balance will drop to –$20, and you will be charged an overdraft fee. In either case, the bank’s charge decreases the available account balance.