There are numerous scenarios where checks are written and issued, but not all of them result in the check being cashed by the recipient. One such scenario occurs when the check writer does not have sufficient funds in their account to cover the amount specified on the check, also known as dispensing a bounced check. When this happens, it’s typically up to the recipient of the bounced check to decide what to do next, with several options ranging from no action at all to filing legal action with courts of law to recoup funds lost because of the bounced check.
What Is a Bounced Check?
A bounced check is a check that is returned by the bank because there are insufficient funds in the account to cover the check. This can happen for a variety of reasons, but most often it occurs when someone writes a check for more money than they have in their account. When this happens, the bank will return the check to the payee with a notice that says NSF or Non-sufficient funds. The payee can then take steps to collect the money from the payer.
Because it costs money for banks to process returned checks, most banks charge NSF fees or non-sufficient funds fees on bounced checks. Fees can vary from bank to bank, but in most cases you will be charged for each check that bounces. These penalties usually start out small but can increase if your account continues to bounce checks. In many cases, you will also be charged for legal collection services and interest on overdue payments.
Understanding Bounced Check
A check is a written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer. When you bounce a check (or have one bounced back to you), it means that there wasn’t enough money in the account to cover the check, so the check was returned unpaid. This can happen for various reasons: You may have written the wrong amount, miscalculated the total, or there may have been an error at the bank. Regardless of the reason, if you have a payment that’s returned unpaid, it’s important to take care of it as soon as possible.
The best thing you can do if you bounce a check is contact your bank and discuss how to handle it. You may have gone into overdraft or bounced another check, which means your account needs more money to be kept in good standing. If that’s not an option, your bank might require that you provide additional funds within a certain time period or close down the account and open up a new one. Always make sure there’s enough money in your account before writing checks so they don’t get returned unpaid. If things are beyond repair, it’s best to start over by closing down your old account and opening up a new one with more robust funds available for check writing purposes.
Are There Fees for Bounced Checks?
When your check bounces, the bank will typically charge you a fee for the returned check, as well as any fees that the payee may assess. The amount of the fee will depend on your bank’s policies, but it is typically around $30. If this is your first time bouncing a check, your bank may waive the fee. However, if you have a history of bounced checks, they may not be so forgiving. In addition to any fees charged by your bank, the payee may also charge you a fee for the returned check. This fee is typically around $25-$35. So, if you’re not careful, a single bounced check could cost you upwards of $60 in fees!
There are a number of things that can cause your check to bounce. If there isn’t enough money in your account for example, or if an automated payment has cleared and drained all of your funds. Even making an improper notation on your check could cause it to bounce. However, even if you didn’t mean for it to happen, once it does occur, there are steps that you can take to ensure it doesn’t occur again. With some careful budgeting and knowledge of bank policies, bouncing checks can be easily avoided!
What Happens When a Check Bounces?
A check that bounces is also called a non-sufficient funds (NSF) check. This happens when there are insufficient funds in the account to cover the check, and as a result, the check cannot be processed. The bank will usually charge the account holder an NSF fee for processing the check. If you have received an NSF check, you can try to cash it again at a later date or ask the account holder to provide you with another form of payment.
In most cases, if you have received an NSF check, your bank will automatically credit your account with any funds owed. However, there are some situations where banks may choose not to credit your account. For example, if the check is issued by another financial institution and it cannot be returned for insufficient funds. In some states, banks are prohibited from charging NSF fees on certain types of checks such as government checks and payroll checks. State laws vary in terms of which types of checks can be processed without sufficient funds available and which ones cannot be processed without sufficient funds. Some states may limit or prohibit these fees altogether.
How to Avoid Bounced Checks
A bounced check is a check that cannot be processed because there are insufficient funds in the account on which it was written. There are a few things you can do to avoid this embarrassment and inconvenience:
- Always know your account balance.
- Keep track of checks you have written.
- If you write a lot of checks close together, keep some extra cash on hand in case one of them bounces.
- When in doubt, ask the payee if they will accept a money order or cashier’s check instead.
- Be aware of the float period. This is the time between when you write the check and when it is actually processed by the payee.