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You may be familiar with this theme: it’s the first day of the month and you need to pay the rent but payday isn’t until the fourth. You can’t bear the thought of bouncing a check and having to endure the indignity of another $35 fee. You think to yourself, as long as the check doesn’t clear until then, you will be fine, so you postdate the check for the fourth.
You check your account the next day and find that not only did the landlord deposit your check, but it also cleared your account, triggering another unforgiving overdraft fee. Wait, was that supposed to happen?
Postdated Checks Carry No Weight
Unfortunately, it was. Postdating a check to a later date is not illegal, but the check recipient is not legally bound to wait until the postdate to cash it. The involved financial institution is not obligated to delay processing it unless the check writer provides a note on the postdate. That is according to the Uniform Commercial Code which establishes guidelines based on business laws practiced in most states.
How Much That Bounced Check Can Cost You
If you haven’t bounced a check lately, you should know that the non-sufficient funds (NSF) fees can hurt. Banks now typically charge between $27 and $35 for NSF. If the check is returned to the payee, you could get hit with a returned check charge, which can range from $15 to $40. If the payee resubmits the check for payment before you are able to put the money in your account, you could be charged another NSF fee. You may also be liable for any late payment fees the recipient wants to charge. It’s like a bad dream, which is reason enough to avoid writing checks before you have the money in your account.
How Long It Takes for Your Check to Bounce
In the old days before remote deposit capture technology, the process of clearing a check could take up to three business days. If you wrote a check at a grocery store, the store would physically deposit the check at the end of the business day or early the next day. Your bank would have to wait to receive the physical check as evidence of payment.
Today, checks written to larger businesses are deposited remotely, utilizing scanners and electronic funds transfer. It is now possible for your bank to receive evidence of your check as an image the next business day.
What to Do If Your Check Bounces
By the time you realize your check has bounced, all you can do is try to contain the damage. If you act promptly, you may even be able to minimize the damage.
Contact the Payee
Immediately contact the payee to let them know your check has bounced. In most cases you will know about it before the payee does. So you have the opportunity to get out in front of it, let the payee know, and then offer to make good on the check. In some cases the payee will try to resubmit the check for payment. In other cases they might send you the returned check with a bill for a returned check fee.
You can contact the payee and offer to come in personally to pay the amount owed along with a returned check fee if necessary. In doing so you will stay in the good graces of the payee and minimize the possibility of additional collection actions and charges.
Contact Your Bank
Your bank will have already charged your account an NSF fee. If your account is still deficient, you must contact your bank and let them know when you will be able to deposit more funds. Once your account is current and your fee is paid, you may be able to get your bank to waive the fee if your account has been in good standing and you have never bounced a check in the past.
What to Do If You Receive a Postdated Check
You are under no legal obligation to delay cashing a postdated check, and you shouldn’t accept a postdated check from anyone you don’t know or trust. If a good friend is reimbursing you for some groceries you purchased for them, you may decide to accept it and delay cashing it because you know they are good for it. Always check the date on the check to make sure it is the current date. If it is not, simply do not accept the check.
Author: Jeff Gitlen