Banks charge a POS decline fee or denial fee when a customer tries to use a debit card to buy something but the bank refuses to let them. POS, or point of sale, terminals are electronic devices at store checkout areas that read debit and credit cards to submit a sale for approval or rejection.

Why They Happen

Most commonly, a bank will decline a POS transaction because the account linked to the debit card doesn't have enough money in it to cover the purchase. If the account limits the number of debit card purchases you can make and you've reached your limit, the bank might fine you for your error.

Legal Tender

Not all banks charge POS decline fees. Under federal regulations, a bank can charge them as long as it notifies customers it will do so. Banks usually do this by including it in their basic card agreement, the document that spells out the rules for using the bank's debit card.