Why do banks charge a fee on "insufficient funds" when they know there is not enough money?

Answer 1

Because they have to handle the transaction and need to punish you for doing that.
If they let everyone do it for free, they would be swamped by deadbeats and nobody would accept checks from that bank.
I do admit though, many of their practices are on a fine line of being fraudulant, but they have attorneys approve all of their rules and fees so they can stay barely legal and still charge you out the wazzoo for anything you need in service.
Face it, nothing is free anymore and if it is, it probably isn't worth having.

Answer 2

because banks are criminals

in the uk default charges have been ruled as unlawful and unfair and people are claiming back all the charges (for the last six years max)

eg if you've been charged £30 for going overdrawn (even by 1 penny) you can claim that £30 back because the charge is not proportional to the amount it costs the bank to send you that letter (maximum £2 including postage etc)...i have listed some websites which can help you and those in the uk....

in fact i would even advise those abroad (especially in the usa) to seek advice about bank charges in their countries and see if they can claim them back

Answer 3

It is a way to make money and from a bankers terms a penalty because you wrote a check or tried to spend money you do not have. It is a fee because the bank had to use their money to cover you.