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What is a Bounced Check?

Mary McMahon
Updated May 16, 2024
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A bounced check is a check which is returned by a bank because the check's author does not have sufficient funds on deposit. This colloquialism refers to the fact that the check is “bounced” back from the bank; such checks are also called “rubber checks.” In the United States, changes in the way in which checks are processed have increased the possibility of bouncing checks, as check writers can no longer rely on so-called “float.”

When someone writes a check to someone else or to a company, that entity in turn deposits the check into the bank. When a bank processes deposited checks, it consults the issuing bank to ensure that the author of the check has enough money to pay for it. If funding for the check is sufficient, the deposit goes through, and the funds are transferred from the account of the author to the account of the recipient. If the funds are not sufficient, the processing bank bounces the check back to the person who attempted to deposit it so that he or she is aware that the deposit has not gone through.

Because a great deal of paperwork accompanies bounced checks, banks typically charge a fee for processing them. This fee may be applied to the person who tries to deposit the check, or to the person who wrote the check. In some cases, a bank will cover a bounced check, and then charge the author for making up the difference in funds. Generally, when a check bounces back to an individual or company, action will be taken against the author to recover the funds, since presumably the author has already enjoyed the service that the bounced check was supposed to pay for.

In some regions, people deliberately write checks which could bounce, relying on a concept known as “float.” Float assumes that it will take several days for a check to be processed, and during that period the check's author could raise and deposit the funds necessary to cover the bounced check. This practice is not advisable, since many banks now use instantaneous processing, in which case the temporary shortfall in funds could be a serious problem.

Most people try to avoid generating a bounced check because it can reflect poorly on a credit record, and repeated bounced checks may lead to being blacklisted by a particular company. Landlords, for example, may require payment of rent in the form of cash or money orders in the future if a tenant writes a bad check. The fees for bounced checks can also rack up surprisingly quickly, and the author can be liable for criminal action taken on behalf of the check's designee.

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Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments

By anon332495 — On Apr 29, 2013

If a person sends me a check and I try to deposit it into my account and find the check has bounced, then what should I do about it? What steps will be taken by the bank authority to solve the matter? Will I have to bear the penalty or the check author and how much would be the amount (like a bounced check of 1 lakh).

By Sunny27 — On Aug 24, 2010

Latte31- I used to work in a bank,and we used ChexSystems. This was sort of a reporting agency that provided information regarding a potential customer and their check writing habits.

Chexsystems only provides information to the banks they don't deny anyone's check from being cashed or deny a new account opening.

If the bank does not provide information to this reporting agency regarding a negligent customer that they had, then Chexsystems can’t report this information.

This system is set up to protect businesses from bad check writers. The information stays in the system for a period of five years. So aside from it being very expensive, you really have to think twice before you bounce a check.

By latte31 — On Aug 24, 2010

Bhutan-I have overdraft protection too. I've never needed to use it, but I like to have it as an extra insurance measure.

What I don't understand is an employer bounced check.It is one thing if you are overdrawn or make a mistake with your account, but how can a company not be able to pay their employees properly.

An employee is depending on the pay check to pay their bills, so if the check bounces may not only will they have to pay the bounced check charges, but they also don't have an actual check to draw from.

This can be very embarrassing for the employee as well. If the problems persist, it is best to contact the Dept of Labor and file a formal complaint.

By Bhutan — On Aug 24, 2010

The advantage is that you a account to draw funds from and you can also have overdraft protection, and direct deposit.

Bounced check charges can really add up. Most bounced check fees can be up to $35 per occurrence.

A fee for a bounced check can be avoided with overdraft protection. With overdraft protection; the bank agrees to transfer funds from another account into the checking account in order to cover a check.

Since this money is transferred over to cover the balance of the check there is no fee for bounced checks because the overdraft protection protects you when you don't have the funds in a particular account.

However, you need to have the funds in another account in order for the service to work. Some banks may still charge a fee for this service but it's substantially lower than any bounced check fee.

Also, banks report a bounced check and it can affect your credit rating and ability to cash a check elsewhere.

By anon24848 — On Jan 19, 2009

what are the advantages of checking deposits?

Mary McMahon

Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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