What does NSF stand for in banking terms?

The term NSF stands for Non-Sufficient Funds in banking terminology. This phrase is used to indicate that a bank account does not have enough money to cover a transaction, such as a check being written or an automatic payment being processed. When an attempt is made to withdraw more funds than are available in the account, it results in an NSF condition, which can lead to returned checks and additional fees or penalties imposed by the bank. Understanding this term is crucial for managing personal finances because it highlights the importance of maintaining sufficient balance in an account to avoid overdrafts and the associated costs.