How to Deal With a Bounced Check

Consumer protection, Money, Tips & how-to

bouncedchecks_squareSometimes it’s an error on the bank’s part, sometimes it’s a simple miscalculation on your part, but whatever the reason, a bounced check is a pain for both the check writer and the check depositor. Here, steps to take care of it, and ways to prevent it from happening again.

If You Bounce a Check

When you write a check that your bank account can’t cover, you not only still owe the original amount of the check, but usually a fee on top of that. There’s not much you can do but pay the bank when you’re able to. If it’s the bank’s fault that you bounced the check, and you can prove it, you will likely be able to avoid paying the extra fees, or get them refunded to you.

How to Avoid Bouncing a Check Again

The best way is to balance your checkbook regularly or to keep a very close eye on your bank account. Many banks now offer notifications via email or text that tell you when your account is below a certain level.

Be aware that clearing a check can take hours or days. This means that you can’t assume a check you deposited to your account has cleared in full and that you have all funds available to you. This also means that when you write a check, you need to be sure you can cover it immediately. In the old days, the physical check needed to be present to be processed, but in today’s digital world, that’s not necessary. It means your check can be processed in a few hours rather than a few days.

Consider getting overdraft protection on your checking account. Policies vary from bank to bank, but often, a bank will cover your charge for a fee. Others let you attach your checking account to a savings account or to a credit card, but these methods often come with a fee, too. The fees might not end up saving you money in the long run, but at least you won’t get a reputation for writing bad checks. Consider whether your bank’s overdraft protection makes sense before signing up.

If You Deposit a Bounced Check

It can take weeks for your bank to officially notify you that a check bounced. Often in the meantime, if you’re in good standing, the bank has given you access to that money, expecting the check to be good. This can make the situation complicated, because you might find yourself in the red, owing the money back, plus a fee for the bounced check. Cover your account as quickly and as best you can, so that you don’t have overdraft fees, too.

Then contact the person who wrote you the check by phone and by letter. Hire a lawyer to help you correctly word the letter, sometimes called a “Notice of Dishonored Check” or “Bad Check Notice,” as the mandatory content of the letter varies by state. You might also have to contact the check writer’s bank to make sure they received the notice.

This assumes the check was written in good faith and it bounced due to an oversight. If you suspect the person wrote a bad check with the intention to defraud, it’s time to get the law involved. Writing bad checks on purpose is illegal.

How to Avoid Depositing a Bad Check Again

You can try to verify funds before you deposit. Find the name of the bank on the check and call them, and say you’d like to verify funds in the account for the amount of the check. Some banks will charge you a small fee for this service, while others won’t do it at all.

Even better, avoid personal checks altogether. There are many other ways to get paid, so why take chances? Use PayPal, do a wire transfer, or ask for a cashier’s check, which is as good as cash.