If you need to pay a bill, try reaching out to the vendor to discuss paying at a later date or in installments. 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. Key takeaways. What is a bounced check? Bounced check fees: Overdraft and NSF. Merchant fees for a bounced check. Another penalty for bouncing a check: You can get written up.
Your bank may close your account because of a bounced check. What to do if you bounce a check. The liabilities and penalties that will apply vary by state law. To make the check right, you may have to seek legal assistance or hire a collection firm, both of which cost more money. You may also ultimately be unable to recover the money and be out both the items you sold and the funds. Being out of the cash from the sale could put your business or family at financial risk, too.
If you were counting on that revenue, you might find it challenging to meet your other financial obligations. Several bad checks can be a financial nightmare, especially for business owners. If you habitually write bad checks, you could find that your name gets reported to agencies like Telecheck and ChexSystems. The consumer reporting agencies connect banking information to retailers who accept checks and let them know if a particular checking account number or name is a high risk.
You also could have difficulty opening a bank account since banks also report to these agencies. In alone, banks charged U. While it may be frustrating not to have the money you expected in your account, take a moment and assume the bounced check you received is an error. A little compassion can go a long way in getting you paid and help you avoid more time-consuming steps.
You never want to be on the writing or receiving end of a bounced check. However, if the unthinkable happens, you have ways to make both situations right. The best defense against writing or receiving bad checks is to adopt some sound financial practices, stick to a budget and use the available overdraft protections offered by your bank as a safety net. She has worked as a personal finance editor, writer, and content strategist covering banking, credit cards, insurance and investing.
As a small business owner and former financial advisor, Daphne has first-hand experience with the challenges individuals face in making smart financial choices. Select Region. United States. United Kingdom.
Napoletano, Daphne Foreman. Contributor, Editor. Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations.
Although this is an extreme consequence, it is a possibility. You should talk with a bank representative if you believe you are skating close to the line of too many bad checks.
If you are proactive about the situation, they may be more willing to work with you. Salvador Gonzales, a professor at Walden University. Not only will your check bounce, but you will also have to pay a fee for writing a check with insufficient funds available. At that point, you may need to reissue a check for the payee to cash. However, you can contact your bank about their preferred protocols for handling a stale check.
If the check in question has incorrect or missing information, then it could bounce. A few things to watch out for include:. A bounced check is something that should be avoided. Not only can it be an embarrassing situation with the payee, but it can also lead to extra penalties from your bank. Steve Orlowski, a financial planning expert, recommends adding an overdraft line of credit to your account.
Additionally, Orlowski recommends signing up for helpful alerts if you bank online. With that feature, the bank will automatically let you know if your account balance dips below a dangerous threshold.
How We Make Money. Sarah Sharkey. Written by. Sarah Sharkey is a contributing writer for Bankrate. If it goes through, your account could end up overdrawn. If the check doesn't go through, you may still be stuck with an overdraft fee.
These aren't the only ways you can bounce a check. Click here to learn about more surprising ways you can bounce a check and read this to find out how you can respond if that happens. While you're at it, read about your credit report here and how you can dispute it to ensure fairness and accuracy.
This article originally appeared on UpturnCredit. Top Stories. Top Videos. Getty Images. Sponsored Business Content.
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