When a bank returns a check, it's an unfortunate setback but not too difficult to resolve. If you've received or accidentally sent a bounced check, we'll explain why it usually happens and the steps you can take to fix it.
What is a bounced check?
A bounced check occurs when a check can't be processed by a bank. Here are a few of the most common reasons why checks bounce:
- The person may have written the check incorrectly by putting the wrong date or writing the wrong check amount.
- The account belonging to either the payee or payor has been closed.
- There aren't enough funds in the payor's bank account to cover the amount listed.
- The payee holds onto the check for too long. Checks have an expiration date, at which point they become void.
Consequences for the check issuer
Returned check fees
Financial institutions may charge a returned check fee to a bank account if there aren't enough funds to cover a check. Fees may vary from $10 to $36, depending on the financial institution.
Some banks might offer ways to reverse or reimburse bounced check fees. If your check bounces, reach out to your financial institution to see if they can work with you to reduce the bounced check fee.
Bank fees
Some institutions also charge a non-sufficient funds fee or overdraft fee if a check bounces, though these types of fees are becoming less common.
Some brick-and-mortar banks are also beginning to waive fees on returned checks. For instance, Wells Fargo and Bank of America no longer charge you for bouncing a check.
Service provider fees
If you send a check to pay for a monthly bill and it bounces, you also might have to pay a late payment fee if the due date has passed.
Legal implications
Some states consider a bounced check a criminal offense if the payor was aware of insufficient funds in their account to cover the deposit.
Consequences for the recipient
Delayed payment
If you've received a bounced check, you'll have to contact the person and let them know the check has bounced. On their end, they'll have to write a new check and send it.
Fund reversal
If you deposited a check and the funds were made available to you before the check cleared, a bank may reverse the deposit if the check bounces and ask you to repay any funds that were spent.
How to avoid bouncing checks
Maintaining a positive account balance
A bounced check is inconvenient for everyone involved. Avoid sending a bad check through account monitoring, either manually or by setting up account alerts so you're notified when your balance is low.
Many banks let you set up account alerts either online or through your mobile banking app. You can set these to go off when your account balance goes under a certain amount of money or to notify you if a check bounces. This can help you know when your account is in danger of going negative.
Regardless of whether you have account alerts set up or not, you should regularly check your monthly bank statements and account balances, which you can also do online.
You can also avoid bounced checks by making sure your checking account has a financial buffer. To do this, you'll keep more money in your account than you think you'll need. This amount can be anywhere from a few hundred to a few thousand dollars. If bills end up being more expensive than you expect, your buffer can help you avoid overdraft fees and bounced checks.
You can also set up overdraft protection for your account. There are several types of overdraft protection, but one common one is to link a savings account or credit card to your checking account. When you overdraft your account, money will be pulled from your linked account instead of taking your checking account into the red. The best banks for avoiding overdrafts offer this feature for free, but others might charge you a small fee for each transfer.
Alternative payment methods
You may also consider using certified checks or cashier's checks to guarantee the funds remain available in your account long enough for the check to clear.
A personal check is usually the least secure method of payment between unfamiliar parties. If you're accepting a payment from a stranger or acquaintance, a certified check or cashier's check can also help your peace of mind.
Other options include wire transfers or online payment apps, which offer near-instant payments, or money orders, which are essentially prepaid checks.
If it's an option, using a credit card or debit card instead of a check can help you avoid bounced check fees, although you'll still want to keep a close eye on your funds to make sure you're not overspending and accruing credit card debt or overdraft fees.
Bounced check FAQs
What exactly is a bounced check?
A bounced check is a check that cannot be deposited by the recipient's bank.
Why do checks bounce?
Checks often bounce due to insufficient funds in the payor's account, a mistake in how the check was written, or a closed account.
What fees are associated with a bounced check?
The most common bank fees imposed on the check issuer, or payor, include non-sufficient funds fees, overdraft fees, and returned check fees.
How can bouncing a check impact the issuer legally?
Issuing a bad check can have legal implications depending on state laws. Repeatedly and knowingly issuing bounced checks can lead to a suspicion of fraud.
What are some effective strategies to prevent bouncing checks?
Prevent bounced checks by regularly monitoring your account balance through bank alerts and using alternative payment methods, such as online payment apps, money orders, certified checks, or cashier's checks.
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