An NSF check is a check that was not honored by the bank of the entity issuing the check, on the grounds that the entity's bank account does not contain sufficient funds. In effect, the party writing the check did so for an amount exceeding the remaining cash balance in the associated checking account. This situation may also arise when a bank account has been closed. NSF is an acronym for "not sufficient funds."
The entity attempting to cash an NSF check may be charged a processing fee by its bank. The entity issuing an NSF check will certainly be charged a fee by its bank. An alternative situation is that the bank of the entity issuing the check will honor the check, and then charge an overdraft fee to the check issuer. In this latter case, the entity cashing the check will not be charged a processing fee by its bank, since the funds have cleared.
Someone issuing checks can avoid an NSF check by conducting ongoing check reconciliations. Doing so makes it less likely that any checks will be issued for amounts that are not currently present in a bank account. Another option is to always maintain excess funds in a checking account, though this approach reduces your ability to earn interest on invested funds.
An NSF check is also known as a bad check, bounced check, or dishonored check.