What does it mean when a check bounces?

If you’ve ever written or received a check that can’t be deposited, you know the mild panic it can cause. Bouncing on a check is never fun, and like either party, there could be consequences. These consequences usually include fees – but legal action or other long-term ramifications are also possible.

Read on to learn more about bounced checks, their consequences and how to avoid them.

What is a bounced check?

A bounced check, or rubber check, is a check that cannot be processed for a number of reasons. Often a check bounces because there are insufficient funds in the check issuer’s account. When a check bounces, it is returned to the issuing bank and the recipient cannot cash it.

What happens when you write a bounced check?

There are several things that happen when a check bounces. If you are the check writer, you will usually have to pay taxes and may face other consequences.

Taxes

You may experience a situation where there is not enough money in your account to cover a transaction. Although many banks have eliminated these fees, some still charge them and can exceed $30.

Overdraft fees can be another consequence of a bounced check. Banks charge when you don’t have enough money in your account but your bank is still processing the transaction. It usually runs around $35.

In addition to , merchants may also charge processing fees for bounced checks. The limits of these fees vary by state, but are usually around $20 to $40.

Report

Writing a bad check, especially repeatedly, can cause merchants or banks to bar you from this type of payment or report you to various agencies.

For example, if you try to pay a merchant with a bad check, they may refuse to let you pay by check in the future. If your check ends up in collections, it may appear on your credit report. Finally, your bank may report repeated bounced checks to ChexSystems, a consumer reporting agency that banks refer to when reviewing account applications.

Account closure

If you repeatedly write bad checks, . Closing this account on your record may make it difficult to open a new account in the future.

Legal Consequences

If you accidentally write a bounced check, you probably won’t face any legal consequences. However, intentionally writing a bad check can result in criminal penalties. Laws vary by state, and consequences can include additional fees and even jail time.

What happens when you deposit a bounced check?

If you deposit a bounced check, you or your bank may not notice right away. It may take a few days for a check to be removed or rejected.

If you deposit a check, spend some of the funds, and the check later bounces, you may be in a crunch to repay the money. You can, however, contact the issuer of the check and request a refund.

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Reasons for a bounced check

A check can bounce for a number of reasons; these are some of the most common scenarios:

• Insufficient funds: Checks often bounce because there is not enough money in the account to process the transaction. There are many reasons why you may have insufficient funds, such as writing a check before your direct deposit is cleared.

• Closing the bank account: If you or your bank closes your account before a check is deposited, the check will bounce.

• Check error: Making mistakes or errors when it can result in a bounced check.

• Fraudulent verification: A involves scammers who write fraudulent checks and ask the recipient to deposit and return some or all of the money before the check bounces. The check will eventually bounce and the recipient will be on the hook for the funds they lost.

• Stop payment by check: A stop payment is a request from the account holder for the bank not to process a payment. If someone issues a stop payment on a check before it clears, the check will bounce.

• Stale check: Personal, or become “obsolete” after six months. So if you try to deposit a check dated more than six months ago, it will bounce.

What to do if you write a bounced check

If you write a check that bounces, take the following steps to minimize the consequences and make things right:

• Contact the recipient: Tell them about your mistake and explain how you are handling the situation.

• Make payment: Pay the recipient as soon as you can, but make sure you have enough funds first. You don’t want to risk giving another check.

• Payment of commissions: You may owe fees to both the merchant and the bank. Pay any fees as soon as possible.

• Keep detailed records: Record the details of the situation, including the dates and amounts of payments and charges. This information may be useful if you ever need to dispute an error.

What to do if you cash a bounced check

If you cash a bounced check, use the following steps to track your payment:

• Contact the check issuer: Let them know they bounced their check. Ask them to check their account balance to see if there is enough money to process the transaction.

• Try depositing the check again: If the bounced check was due to insufficient funds, you may need to wait a few days for the received funds to clear.

• Send a formal letter: If contacting the check issuer and trying to redeposit the check doesn’t work, send a formal letter asking for payment and include details of what happened. You can find templates for writing this type of application letter online.

• Take legal action: If you do not receive payment in response to your letter, you can take legal action and file a claim in court.

If you deposit a check that you believe may be fraudulent, contact your bank immediately and report the incident to your local authorities and the Federal Trade Commission (FTC).

Frequently Asked Questions (FAQs)

What is the difference between a bounced check and a bounced check?

A bounced check is another way of describing a bounced check. When there are insufficient funds in the check issuer’s account for the check to clear, the check is returned or bounced.

Does a bounced check hurt your credit?

A bounced check usually doesn’t affect your credit, at least not directly. If you write a bounced check, you’ll be on the hook for fees, but your bank usually won’t report it to the credit bureaus.

However, if you cash the check to pay a bill and it bounces, causing you to miss a payment, the creditor—a lender or credit card company, for example—might report the late payment to the credit bureaus.

How can I avoid a bounced check?

You can avoid a bounced check by only accepting checks from people you trust. You can also verify that all fields on a check have been filled in when you receive it. To make sure you don’t spend money that never arrives, wait a few days to make sure a deposited check doesn’t bounce. Finally, if you expect a large check payment, you can ask to be paid with a or , which is guaranteed by the bank.

How can I avoid writing a bad check?

You can avoid writing a bad check by keeping a close eye on your checking account. Don’t write a check for more than yourself, even if you expect a deposit to come.

Record any checks made and use a debit card when possible. If your bank offers , consider signing up. This service connects another account, such as a savings account, to cover the difference if you go over your checking account. Keep in mind that there may be overdraft protection fees.