Bounced Checks: What You Need to Know | Banking Advice

Bounced Checks: What You Need to Know | Banking Advice

We are not always ready with the cash payments. But what if we need to pay someone with the amount of money that is not safe to carry out. There is always a fear of getting robbed. The best way to overcome such problems is the payments by cheques.

Cheques are a way of paying a person, Institution or sending money directly to the recipient’s account. But receiving or paying money by cheques can be risky and penalty charging sometimes. Make sure before getting or making payment your cheque shouldn’t bounce. The bounced cheque can make the recipient or the payer in trouble. 

The article will provide you information about the bounced cheques, how much will they cost you, How can you prevent the bounced Cheques, What should you do if you mistakenly bounced a cheque.

Read the full article to know more about the Bounced cheques and overcome the problems mentioned above.

Bounced Cheques – The Guide

Before starting with the proper guidance about the bounced cheques lets us get a clear idea about what is a bounced cheque? It is a cheque that is dishonored or rejected by the bank due to various reasons. These might be the invalid signature, stale Cheque, or insufficient funds in the account.

Insufficient Funds

The major reasons for the bouncing back of cheques from the bank are the insufficient fund or balance in the account. This situation may arise when the payer has signed more than the balance in his account.

Irregular Signature

If your signature does not match the exemplar signatures that you provided while resting your account then the bank will definitely bounce back your cheque. Most people use digital signatures these days and getting the same signatures you did 5-7 years back is a difficult task. You need to be specific with the signatures while signing a cheque.

The date on Cheque

You need to be specific with the date on the cheque. There are possible two reasons in which the dates can lead to the bouncing of checks. 

The first one is if you have forgotten to mention the date on the cheque. In this case, your cheque may be canceled or returned back for mentioning the date depending on the action taken by your bank.

The second case which arises here is the expiration of the cheque. Usually, a cheque is valid for up to 3 months. For example, a cheque is signed on 19 march 2021 the cheque won’t be valid after 19 June 2021. In this case, your cheque will be bounced and canceled. You again need to get a signed cheque with the latest date.

Overwriting On Cheque

Your cheque must be written in a proper manner that is the writing must be clear and understandable. Try not to overwrite the name or amount to the signature. All these activities are considered malpractices by the bank and the bank will definitely bounce the cheque.

Damaged Cheque

The bank will refuse to take the cheque that is torn or the writing is not understandable. The cheque you are about to submit should be in proper order and in good handwriting with the proper date, name, amount, and signature.

Frozen Account

This term is not used normally and you might be coming across this term for the first time. So let me tell you what is a frozen account. An account is frozen by the bank if the government orders the bank to freeze the account of the particular person. This might happen if there is any criminal case against the person who is involved in the money fraud. The cheque issued against such an account will definitely be bounced.

How Much Will a Bounced Checque Cost You

A bounced cheque may cost you a penalty. If your cheque is bounced due to any of the reasons mentioned above then you will be in the trouble. Following actions can be taken against you.

A Penalty By the Bank

If your cheque is bounced by the bank due to insufficient balance or the signature mismatch or any of the reasons mentioned above then the bank has the full right to charge you a penalty for frauding the bank. The penalty charges may differ from bank to bank.

If you paid your loan by the cheque that is bounced then the bank will charge you a penalty as the late fee.

Damage to the Credit History

Bounced Cheques or the dishonored cheques will definitely cause damage to the financial credit. Let me remind you, your credit history is always checked by the bank before lending the loan to you.

To overcome such problems always try to keep more amount in your account than the cheque you are signing.

Criminal Charges

If the person refuses to pay the bounced cheques charges then he is liable to be prosecuted by the court if found guilty and it is proven that he has knowingly issued the bounced cheques. The court might imprison you or can charge you a penalty for double the amount of the cheque that was bounced

Conclusion

Beware next time you are about to sign the cheque. You must know the amount present in your account and try not to overwrite it. I hope now you are clear with all the doubts, do write us, we are waiting for your replies in the comments section.

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