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What happens when a check bounces

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Ever heard someone say ‘the check bounced’ and wondered what they mean? It’s fairly simple – a check bounces when there isn’t enough money to honor the payment and the check is returned. It’s not only awkward, it can land you with fees (whether you wrote the check or tried to cash it) and can affect your credit if it happens too often.

Here’s what happens when a check bounces:

Your payment won’t go through

If you write a check and it bounces, the person you owe won’t get the money and you could find yourself overdrawn. If you’re using that check to cover expenses like rent and utility bills, your bills won’t get paid either. So you could miss important payments and be hit with late payment fees, or worst case, have your services cut off.

Check bouncing fees

If you write a check and it bounces, you could face multiple fees as will the person who tried to cash it. Banks charge for every administrative task involved in dealing with a bounced check, so it’s not as simple as paying one small fee.

  • Overdraft fee – If you don’t have overdraft protection set up on your account and your account balance drops below zero, your bank will likely charge you. Some may waive fees if it’s a first offense but if you go over your limit regularly, they’ll charge you every time. This can range from $25 - $40 per check, depending on your bank’s rules.
  • Administrative fees from their bank – Banks will charge the person who tried to cash the check a fee too, and in a lot of cases, they might pass that on to you. That’s most likely to happen if your check was to a large organization like a power or phone company. That fee can be anything from $20 to $40.

Your credit score or account can be affected

One bounced check might not affect your credit score but some credit databases like Telecheck and ChexSystems do log it, so it’s best to avoid it if you can. Once a bad check has been added to your record, you might find stores won’t accept your checks as payment and some banks might not even let you open a checking account with them.

Generally, bounced checks won’t affect you being able to get credit for big purchases like a home or a car (those lenders use different databases), but if they mean you’re going into overdraft regularly, they might. Also, if the check was to pay for a bill like a loan payment, there will be other effects that can impact your credit score.

And don’t forget, knowingly writing bad checks is illegal, so it’s not just your credit record that could be affected. It might be a criminal record too.

Can you cash a check without a bank account?

Yes, there are a few ways to cash a check if you don’t have a bank account. You can cash a check with credit unions or sometimes, at the issuing bank as long as you can prove who you are with the right ID. Or, you could use a third-party check cashing service, like Money Services. These are found all over the US, within the Kroger Family of Stores.

You can also add the money to a prepaid card, which you can use anywhere you can use a standard bank card. The balance of the check is added to your account and you can spend until the money runs out, with no fear of going over your limit. You can pick these up at Money Services too.

If you need to pay someone and can’t write a check because you don’t have a checking account, money orders are a great alternative to sending cash in the mail. Find out more about money orders.

Dealing with a bounced check

Having your check bounce can be scary, especially if you thought you had the cash to cover it. But one bounced check doesn’t have to be the end of the world, as long as you get it taken care of quickly.

  1. Contact the person you owe money to right away – Most people understand that mistakes happen and give you a little time to get things sorted out. If you acknowledge the problem and explain what you’re going to do next, they’re much more likely to cut you a bit of slack.
  2. Find another way to pay – If a missed bill payment is going to get you in hot water, it’s important to get it paid as soon as you can. If your account is back in the black, you could write another check or arrange an online money transfer so the funds reach them quickly. If you’re still in the red, talk to your biller about the options.
  3. Get your finances in order – A bounced check is usually due to poor accounting and not balancing your checkbook. Make sure you know exactly what’s going in and out of your account, and when, so you can avoid making the same mistake again.

In summary…

A bounced check can happen to any of us, but it can land you in real trouble if you don’t get it under control.

First, always make sure you know what’s going in and out of your account, so you reduce the risk of a bounced check happening. If it does happen, get it taken care of as soon as possible to make sure one little mistake doesn’t affect you going forward.

Need help cashing a check or want an alternative? Find your local Money Services store and drop by today.

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