A bounced check is one that can’t be cashed because the account it was written on didn’t have enough money or because there was a mistake in the way the check was written. Dealing with a bounced check can be frustrating for both the person who wrote the check and the person who received it.
When a check you wrote doesn’t clear
Your bank may charge you a nonsufficient funds fee or an overdraft fee if a check you wrote bounced. Also, the company you tried to pay may charge you a late fee if your payment is now late because your check bounced. If you don’t pay any overdue fees, your account could be sent to collections.
When you get a check that doesn’t clear
If you got a bad check, you will have to wait for the money you are promised. If the client gives you a check that bounces, you may wonder if they will be able to pay you at all. If you don’t get paid, it might be harder for you to pay your other bills. Your bank may have also charged you a fee for a returned check.
Why a check might be turned down
There are many reasons why a check might not clear, such as:
The account has no money in it. If the amount in the account is less than the amount of the check, the check will be turned down because the account doesn’t have enough money.
The account is no longer open. If you’ve kept a check for a long time, the person who wrote it may have closed or changed their account since it was written.
There was a stop payment order. The person who wrote the check can ask for a stop payment order if they don’t want it to be cashed. This could be because they think the check is lost or they no longer want to pay for a service.
There was something wrong with the check. A check can be written wrong in many ways, like if the amount in the box and the amount on the line don’t match, or if the name of the person getting the check is misspelled.
Too much time has passed. Most checks can be cashed up to six months after they are written. After that, a bank might not accept it anymore.
This check is fake. A fake check could be one that was stolen from the account owner or one that was made out of a bad account.
How long a bad check stays bad
A check takes some time to clear. This is because many banks use the Federal Reserve to check funds from the issuer’s bank, which can take several days. But banks must let you get up to $225 of the money from a check you placed the next day, even if the check hasn’t been cleared by the Fed and the bank that gave it to you yet.
Because of this, you should wait up to five days before you use the money from a check you’re not sure about. If you cash a check or spend a check you entered too soon and then find out it bounced, you will have to pay both the amount of the check you took out and the returned check fee.
What Happens to Your Money When a Check Bounces?
You don’t have to worry that your failed check will have a direct effect on your credit score because bounced checks are not reported to major consumer credit companies. If your check bounces, for example, and you don’t pay because of it, your account could be listed as a collection account. When a loan or credit card payment is more than 30 days late, it can be reported as overdue.
Your ChexSystems record, which is used by banks to judge customers, may show that you have bounced checks. If your bad check is mentioned here, it could make it harder for you to use banks in the future.
How do you get money back from a check that bounced?
You will need to get in touch with the person who wrote the check and asks for payment if it bounces. If you can’t solve the problem by talking to the person, you could send a demand letter via certified mail. This letter should have the amount of the check, the date it was made, and any fees you had to pay when you tried to cash it. There are examples of “bad check” forms that you can look at online.
Keeping a record of these facts and writing a letter asking for payment could help your case if you end up taking the person who gave you the money to the court.
How to Avoid an NSF Check:
Keep your bank account in the black. You can use the app from your bank or a planning app to keep track of everything that comes in and goes out of your account.
Ask for payment in the form of a cashier’s check, a signed check, or a money order. These are safer than a personal check.
Don’t take checks as payment anymore.
In conclusion
The best way to deal with checks that don’t clear is to never write or take them. You can avoid bank fees by keeping an eye on your checking account with the help of budgeting tools. If a bounced check caused you to be late on a payment, keep an eye on your credit score to make sure none of your bounced checks hurt your credit score. If you get a bad check, you can try to get paid by the person who gave it to you. You can also make a plan to avoid getting bad checks in the future.
Bounced checks happen, but if you use the right financial tools to keep them from happening, you can quickly get back on your feet.
