Avoid the Devastating Consequences of Depositing a Bad Check!

What happens if someone writes you a bad check?

If someone writes you a check that ends up bouncing, you might assume that it is their responsibility to make it right.

And eventually it is.

However, what happens before it gets to that point can have devastating financial consequences.

It is critical to understand the life cycle of a bad check that was cashed or deposited in your account.

My Story

Many years ago, decades actually, on payday Brian received and deposited his weekly paycheck in our checking account.

We were young, struggling and living paycheck to paycheck.

As soon as the paycheck was deposited, I proceeded to pay bills and do our normal grocery shopping.

At that time, I paid for pretty much everything with a check.

Imagine my reaction when we received a courtesy call from the bank telling us that the paycheck had bounced, and the funds were being withdrawn from our account.

Because we were the ones that had received the funds, we were on the hook to pay it back.

Now every check that I had written since payday was in jeopardy of bouncing.

What a nightmare!

What is a bounced check?

A bounced check is a term for a check that can’t be cashed due to insufficient funds in the issuer’s account.

When a bank doesn’t honor a check that has been presented for payment, it is “bounced” back to the bank or person to whom the funds were given.

When a check bounces, the person who received the funds is required to pay them back.

This is not optional. The bank can, and does, take the funds directly out of your account.

It makes sense if you think about reversing the original transaction.

The person that received the funds pays the bank back.

In turn, you are expected to go to the person who gave you the check and settle up with them.

If there aren’t enough funds in your account to cover the bad check, the bank will probably put a hold on your account, basically ceasing all activity.

To make everything more difficult, there will probably be an additional fee.

Most banks charge the account holder a fee when a check they deposited or cashed ends up bouncing.

Ultimately, you can attempt to recover the fee from the person who wrote the check.

But in the interim, you will be out the money.

If reversing the transaction causes your account to go into the negative you can expect to pay even more fees.

These fees can be hefty. Expect an overdraft fee of around thirty-five dollars.

Receiving a bad check which ultimately ends up bouncing is a nightmare from which many people have a difficult time recovering.

If paying back the funds from a bad check would create a hardship, there are some things you can do to protect yourself.

Cash the check at the bank on which it is written.

The bank won’t cash a check if there are insufficient funds in the account.

When the teller informs you the check can’t be cashed, that’s your cue to bring it back another time.

If the check is for a large amount and it’s unsafe to carry the cash to your own bank, convert it into a cashiers check or money order.

For a small fee, you can rest assured knowing the check isn’t going to bounce when you deposit it into your own account.

Deposit the check and don’t touch the money for a few days.

If the transaction hasn’t been reversed in seven days, it’s pretty safe to assume the check is good.

If the check is for a large amount, the bank might put a hold on the funds anyway. This is for your protection in case the check ends up bouncing.

What happens if someone gives you a check that bounces?

Now you know. Plan accordingly and avoid the heartache and headache of the devastating financial consequences of dealing with someone else’s bad check.