We all know that it’s never good to bounce a check, but did you know how many ways it’s possible to do so? Here are seven surprising ways you can bounce a check.
1. You Don’t Have Enough of an “Available” Balance
You know that you need to have a high enough bank balance to cover the amount of any checks you wrote, plus any other pending transactions. But did you know that it’s easy to be mistaken on how much your current balance is?
When you log in to your bank account, you should see two different types of balances: Available Balance and Account Balance or Present Balance. These numbers can sometimes be different.
Here’s how Chase Bank describes present balance, which is similar to an account balance:
“Your ‘present balance’ is the previous business day’s ending balance, plus or minus the full amount of any transaction known to the bank made during the current day […] it does not include any checks you may have written but didn’t present to the bank.”
An available balance, on the other hand, “is the amount of the account’s ‘present balance’ that is available for immediate use. Certain pending transactions, such as deposits that contain checks, may not be immediately available and wouldn’t be included in the available balance.”
When you think about what checks might clear on any given day, you want to be sure there’s enough in your “available balance” to cover that amount. If not, your check could bounce. The terminology to describe such a bounce includes “insufficient funds,” “non-sufficient funds,” or “uncollected funds.” The bottom line is this: There wasn’t enough money in your available balance to cover the amount of the check.
One easy option to make sure your available balance is high enough to handle any transactions that might go through that day is to not rely solely on your bank balance information. Instead, keep a checkbook register or other accounting document in which you subtract the amount of any checks you’ll write from your starting balance and make that the amount of money you have to work with for other transactions. That way, if it takes two weeks for the check to be cashed, you won’t have to check your balance every day and hope there’s still enough in there to cover it.
It might sound old fashioned, but if you’re going to write checks, the daily register is one relatively easy option to ensure that they don’t bounce.
2. You Forgot to Sign the Check Or The Signature Is Illegible
If you’re writing a check in a hurry, slow down when you get to the signature line. Your bank has a record of what your signature looks like since you had to sign a signature card in order to open a deposit account. If you happen to write your check too fast and your signature looks different or is totally illegible, the check could end up bouncing.
And if you forget to sign the check altogether, it should bounce. An unsigned check can’t be honored, so make sure you don’t forget this last step.
(On that note, don’t sign checks ahead of time before writing out the payee and amount. If you do and the checks get stolen, the thieves can have a field day writing checks to themselves from your account.)
3. Your Check Was Incorrectly Filled Out
A missing or illegible signature isn’t the only thing that can cause a check to bounce. Your check could also bounce if you filled it out incorrectly in other ways.
All portions of a check except for the “memo” section on the bottom left-hand side must be written out. That means you need to list the payee, the month, day, and year, and the amount to be paid both in numeric and written form. And, of course, you need to sign the check.
Missing information and mistakes can cause a check to bounce. So, besides making sure each section is filled out, you should also double check that it’s filled out correctly.
For example, if you accidentally mismatched the written and numeric forms of the amount to be paid, the check shouldn’t be honored. If a bank employee catches that mistake, the check will bounce. The same goes for any missing information or any markings on the check that make it look as though it has been altered. In that case, the check should bounce as a protection to you, as the bank would be worried about your check having been stolen and manipulated.
Before you hand over or send out a check, give it one last look to be sure each section is filled out correctly. And if you mess anything up, write a new check instead of crossing out information on the old one, as the cross-outs could prevent the check from being honored. If you don’t have another check on you and you must use the one with the mistake, initial next to the crossed-out section. That’s not a guarantee that the check will be honored, but it could help.
4. The Check Is “Stale-Dated”
Have you written a check to someone you owe money to (whether a business or a person) and six months have gone by without it being cashed? If this is an important payment, you might want to reach out to the payee.
Checks that are more than six months old (meaning six months have passed since the date written on top of the check) are called “stale-dated” checks and aren’t supposed to be honored. If you want to minimize the chance the check will bounce, your payee needs to cash that check within six months.
And if you think it’s their fault and not your problem, you may need to think again. If they try to cash the check and it bounces, you could potentially be charged a fee. Instead of risking that possibility, consider letting them know you’ll be placing a stop payment on the check and sending them a new one — and then remind them that it will need to be cashed within six months of the date on the check.
It’s important to remember to place the stop payment on the check prior to sending a new one. If the payee tries to cash the check anyway, and the teller working that day happens not to notice the date on the check, then it could be cashed by mistake.
5. Your Post-Dated Check Was Cashed Early
Post-dating checks was a common (though not exactly above-board) practice when checks were the primary way to pay bills. In order to pay someone the money they owed before they had enough money to do so, people might give the payee a check when the payment is due, but date it for some time in the future when the funds would be available in the account.
This is a risky move, because payees might try to cash a check before the date on the check, and the check could slip through. Even if it is caught, you could end up with a fee if the check bounces. US Bank explains more in its terms of service:
“We are not responsible to you if we pay a check before its date, even if we have noticed that it is post-dated. If we, at our option, refuse to pay a check because it is presented before its date, you will have to pay, if applicable, the fee we charge for an overdraft.”
In other words, your check could go through before you were expecting it to, and that could overdraw your account. And if the check doesn’t go through because someone’s trying to cash it before the date on the check, then you could pay an overdraft fee for the check bouncing. Either way, you could end up with a fee because you sent your payee a post-dated check.
6. You Were Banking on a “Check Legend”
As you might already know if you’re used to writing out checks, there’s a section that you can write notes out on, usually called “memo.” This section is often used for your own records, so you can remember why the check was written, and sometimes payees require certain notes in that section. (For example, your landlord might ask you to write your apartment number in the memo.)
However, some people might try to use this section to control the payment of the check in a similar vein to post-dating the check. But just because you write it doesn’t mean the bank has to honor it. Here’s how US Bank explains it:
“We are not required to honor any legends or memos you put on your checks, even if we are aware of them. By a ‘legend’ or ‘memo,’ we mean a message, such as ‘not valid for more than $50.00’ or ‘do not pay more than ten days after due date’ or ‘paid in full.’”
In other words, if you thought a memo or legend could prevent a check from bouncing, think again. For example, you might not think you’ll have enough money to cover the check after a certain date, which is why you’d write something like what US Bank has in their example: “do not pay more than ten days after due date.” In that case, the bank doesn’t have to honor that memo. The payee could still present the check one month later and get it cashed, which would cause it to bounce if you don’t have enough money at that point to cover it.
Just like with post-dating checks, it’s best to not rely on a “check legend” to avoid a check bouncing, as both can cause this very thing to happen.
7. The Account Your Check Was Written Off Of Has Been Closed or Frozen
Finally, a check will bounce if it’s been written from an account that has since been closed or frozen.
Whether you or your bank closed the account, you’re still on the hook for payments due to the payees to whom you sent checks. One potential solution if you no longer have access to your bank account is to contact your payees and let them know that you’ll be sending out your payment by a check from a different account or another form of payment. Otherwise, the bank could charge you money per their terms of service if the attempt to cash the check on a closed account and it bounces.
Now that you know how many different ways a check can bounce, you might want to learn what happens next. Read here to find out what actually happens when a check bounces, and some options you consider as you decide what you can do about it. While you’re at it, read here to learn about your credit report and how you can dispute your credit report to help ensure that all financial reporting for you is fair and accurate.
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