Not having enough money in your bank account to cover a check you've written is a nerve-wracking experience. Several things can happen that ultimately depend on how your bank processes the check. In most worst-case scenarios, you might need to make an embarrassing phone call to the person or business to whom you wrote the check and pay extra fees. However, if you make a habit of writing checks that can't be honored by your bank – commonly referred to as bouncing checks – you could face harsher consequences.
When the Check is Paid
Depending on your bank’s policies, your bank may choose to pay the check when it is presented to your account, even if you don't have funds available to cover it. Ultimately, your bank decides whether it will honor the check and the decision may be based on your overdraft history, whether you have overdraft protection coverage and how much paying the check will overdraw your account. In most cases, you will still be charged an overdraft fee, even if the bank decides to pay the check.
When the Check is Returned
If your bank chooses not to pay a check that you do not have enough funds to cover, it will return the check as unpaid because of nonsufficient funds. The bank will also charge an NSF fee to your account. In this case, you will still owe the company or person who deposited the check, but you'll also owe the bank for processing the check. Most banks charge an NSF fee of $30 to $45 for each item it processes against an overdrawn account. Some banks may also charge an additional fee for each day your account remains overdrawn.
Facing Possible Merchant Fees
When a check you write to a company is returned, the merchant may also charge a fee. This is in addition to any NSF fees you pay the bank. The merchant’s fee may be assessed to cover returned deposit fees the company pays as a result of your check being returned, plus administrative costs the company incurs to try to collect your payment. Although not every merchant will charge a returned item fee, many do.
If a check you write is not honored by the bank, contact the merchant as soon as possible. In some cases, a merchant may be willing to waive any additional fees it may charge if you are up front about the mistake and make arrangements to make good on the check. However, some merchants may also require you to replace the check with a money order or cashier’s check.
Bad Check System Reporting
If you write checks that you don’t have enough money to cover, you could be reported to a national check reporting system, such as TeleCheck or ChexSystems. These companies record information about bad check writers and a report in these systems may cause your checks to be declined for future purchases. In some cases, a merchant or person may also report a bad check to state authorities, and you could face criminal charges.
Usually, these measures are reserved for people who write bad checks often, or those who do not make arrangements for an unpaid check to be honored. To reduce the risk of these consequences, arrange to pay checks returned by your bank as soon as possible and make sure you have enough money in your account to cover future checks.
FAQs
Depending on the terms of your deposit account agreement, the bank can either return the check unpaid or they can pay the check. If paying the check results in an overdraft, the bank can assess an overdraft fee against […]
What happens if someone cashes a check with insufficient funds? ›
When you cash or deposit a check and there's not enough funds to cover it in the account it's drawn on, this is also considered non-sufficient funds (NSF). When a check is returned for NSF in this manner, the check is generally returned back to you. This allows you to redeposit the check at a later time, if available.
What happens if you write a check and you don t have enough money? ›
The bounced check will be returned to you, and you'll likely be subject to an overdraft fee and/or a nonsufficient funds fee. Is it illegal to bounce a check? It is a crime to knowingly write a check that will bounce. You could be charged with a misdemeanor or a felony for writing bad checks.
What happens if you don't have enough money in your checking account? ›
Overdraft fees occur when you don't have enough money in your account to cover your transactions. The cost for overdraft fees varies by bank, but they may cost around $35 per transaction. These fees can add up quickly and can have ripple effects that are costly.
Do you have to have enough money in your account to cash a check? ›
Cash your check at the issuing bank
Many banks will cash a check that is written by a checking account holder at that bank, even if it is payable to a noncustomer. There must be enough money in the payer's account to cover the check.
How long does it take for a check to be returned for insufficient funds? ›
How long does it take for a check to bounce? Generally speaking, a check for an amount greater than $225 won't clear until two or more business days after it's deposited at a bank. 6 In the same vein, it typically takes at least two business days for a bad check to bounce.
What happens when a check gets bounced? ›
A cheque bounce is an offence under Section 138 of the Negotiable Instruments Act, 1881 (“Act”) punishable with a fine which can extend to twice the amount of the cheque or imprisonment for a term not more than two years or both.
Will a bank accept a check without the amount written out? ›
The FDIC says it's best to make sure there is no room to write anything else on this line. Another thing to know, is that, according to the FDIC, if the amount of the check written in numbers does not match the amount written in words, financial institutions will generally use the amount written in words.
Can you write a check when there is no money to pay the check? ›
If you write a check and have no money in your account, it will be returned for insufficient funds. Writing a check without money in your account, willfully or by accident, the person you wrote it out to won't get paid.
How do I know if a check bounced? ›
If you deposited the check, you can track your account balance to see whether the funds are added. If funds aren't added within a few days, the check likely bounced. If you wrote the check, then you might have to check with the entity that received the check. In either case, you can call your bank and ask directly.
Banks must report cash deposits of more than $10,000 to the federal government. The deposit-reporting requirement is designed to combat money laundering and terrorism.
Is it bad to have empty bank accounts? ›
Your bank could slowly drain the money away
Let some more time go by without using that account, and you could find your bank slowly eating away at whatever money is left.
What's a normal amount to have in your checking account? ›
The general rule of thumb is to try to have one or two months' of living expenses in it at all times. Some experts recommend adding 30 percent to this number as an extra cushion.
Will a bank cash a check with insufficient funds? ›
Generally, a bank may attempt to deposit the check two or three times when there are insufficient funds in your account. However, there are no laws that determine how many times a check may be resubmitted, and there is no guarantee that the check will be resubmitted at all.
Can a bank deny you access to your money? ›
A bank account freeze means you can't take or transfer money out of the account. Bank accounts are typically frozen for suspected illegal activity, a creditor seeking payment, or by government request. A frozen account may also be a sign that you've been a victim of identity theft.
Can banks refuse to give you cash? ›
Banks face fines if they fail to provide free access to cash withdrawals for consumers and businesses, the Treasury has confirmed.
Can you get in trouble for cashing a bounced check? ›
You might deposit or cash a bad check in good faith, only to have it bounce. In that situation, you may be liable for fees, or even be suspected of fraud.
What happens if a bank cashes a check that is later returned for insufficient funds? ›
If your bank credited your account for a check that was later returned unpaid for insufficient funds, the bank can reverse the funds and may charge a fee. As the payee, you must pursue the maker of the check if you wish to seek reimbursem*nt.
