Can You Cash a Bounced Check? What Happens Next

A bounced check, also known as a non-sufficient funds (NSF) check, occurs when a check writer issues a payment for an amount exceeding the available balance in their bank account. Banks also return checks for other reasons, such as a stop payment order or a closed account.

What Happens When a Check Bounces

When a check is deposited and the issuing bank determines there are insufficient funds or another reason for rejection, the bank returns the check unpaid to the depositing financial institution. The depositor’s bank then notifies the recipient that the check has bounced, often through mail, online banking alerts, or a direct message. This notification includes the reason for the return and any associated fees.

Both the check writer and the recipient incur fees when a check bounces. The check writer’s bank charges an NSF fee, which can range from $25 to $35 per returned item. The recipient’s bank may also levy a returned deposit fee, a smaller amount, between $10 and $20, to cover the costs of processing the rejected transaction.

Actions to Take as the Recipient

Upon learning that a check has bounced, the first step for the recipient is to contact the check writer directly. Politely inform them of the situation and the reason for the check’s return, as they may not yet be aware. During this communication, request that they provide immediate payment through an alternative, more secure method.

If the check writer confirms they have added sufficient funds to their account, redepositing the original check might be an option. However, this carries the risk of incurring additional fees if the check bounces again, so approach it with caution and only after confirmation of funds. Many banks allow a second attempt within a certain timeframe, 30 to 60 days from the original deposit date.

To avoid further issues, it is recommended to request an alternative form of payment once funds are available. Secure options include a cashier’s check, which is guaranteed by the issuing bank, or a money order. Electronic transfers, such as an Automated Clearing House (ACH) transfer or a peer-to-peer payment service, can provide a swift and traceable way to receive funds. Throughout this process, maintain clear records of all communications, bank statements, and any fees incurred.

Legal and Financial Implications

A bounced check carries financial and banking implications for the check writer. Repeated instances of insufficient funds can lead to a bank closing the account, as it signals a high-risk banking relationship. Banks report individuals with a history of bounced checks to specialized consumer reporting agencies, such as ChexSystems, which can make it difficult to open new bank accounts for several years.

While a bounced check itself does not directly impact a credit score, if the underlying debt remains unpaid and is eventually sent to a collections agency, it can then negatively affect the individual’s credit report. Recipients who are unable to recover funds may pursue civil legal action to reclaim the original amount, along with any incurred bank fees. Depending on local statutes, courts may award additional statutory penalties, which can be a multiple of the original check amount, plus legal and court costs.

For the recipient, the implications involve the financial loss of the original amount and any associated bank fees, alongside the time and effort required to pursue payment. Maintaining detailed records of all transactions, communications, and expenses becomes important for both parties in case of disputes or legal proceedings. These records serve as evidence of attempts to resolve the matter and any damages incurred.