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Apart from embarrassment, is there any other consequence to having an ACH transaction declined (like an automatic payment of some sort)?
Is it treated the same as a check bouncing? Does it affect your credit negatively (leaving aside potentially late loan payments due to the transaction being declined)?
I've heard (vaguely) about people being prosecuted for bounced checks; does that apply here?
Whoever you were trying to pay does not get the money. Depending on who you were trying to pay, that probably means your bill is still open and you're subject to late fees. I don't think you can go to jail for it, if that's what you're asking in the part about being prosecuted (except in some unusual case, maybe, like the ACH was paying a court fine and you get in trouble for that). No direct impact on your credit, but if it makes your payment late that could impact your credit just like if you had not tried to pay at all.
I understand this is old.... but YES it is treated the same as a bounced check and is considered check fraud. There will be a bench warrant and you will get arrested. It happened to me on a $50 vet bill. It's not the same circumstances for every ACH payment you set up tho. Your credit cards report to the credit agencies and in turn affects your credit. Just resulting in late fees until it's paid. But when you set up an ACH after receiving a service, goods, etc that you could not pay for, then it is the same as writing a bad check when you don't have the funds. In the amount of $500 or less it's a misdemeanor. In my case, I didn't even realize the payment never came out. Got pulled over TWO YEARS LATER for speeding and was arrested on the spot for a bench warrant. It was a first offense and no criminal record and I was released on my own recognizance with a $500 bond due at my court date. However, I only need to pay the balance due along with some fees to the agency that issued the warrant. Warrant then disappears,my record expunged, no court date, and no $500 fine. It's a really silly thing to be arrested for. Especially when it was an accident and you didn't deliberately try to withhold the funds.
Some banks do charge for declined ACH transactions as though they are bounced check fees, but that's something you'd need to check on with your specific bank. If yours does, that might be a good reason to change banks.
You're more likely to incur big fees from whoever was trying to run the ACH debit on your account. There's almost always fine print in those agreements with merchants spelling out what happens in the event of an ACH decline.
Beware that your bank doesn't honor an ACH debit request even though you don't have the money now, because they're very likely to hit you with all of the crazy fees associated with overdraft protections. THAT can get very expensive very quickly. My ex-wife did that on one of her accounts, and a $10 fill-up at the gas station turned into $90 in fees.
The rule of thumb is to know before you set up an ACH agreement what the fees are if something happens to cause the ACH to not be honored, both in terms of what that merchant and your bank will charge for it. You may decide the potential penalties are not worth the convenience factor, but at least you won't be shocked when the bill hits of you do proceed.
I hope this helps.
Good luck!
