What Happens If You Deposit a Check Before the Date?
Demystify what occurs when a check is deposited before its written date, and its consequences for both the issuer and depositor.
A post-dated check is a check written with a future date, indicating the issuer intends it for deposit on or after that date. This practice is often used to delay a payment, allowing the check writer time to ensure funds are available in their account by the future date. While the common understanding suggests that such a check should not be processed early, the reality of modern banking operations means this is not always the case. Understanding the actual process and potential outcomes when a post-dated check is deposited before its stated date is important for both the person writing the check and the person receiving it.
Bank Handling of Post-Dated Checks
Banks process checks based on routing and account numbers, not the date written on them. Under Uniform Commercial Code Section 4-401, a bank is allowed to charge a check against a customer’s account even if payment is made before the check’s date. This is permissible unless the customer has provided specific notice to the bank about the post-dating, describing the check with reasonable certainty. This notification must be given in a manner that provides the bank a reasonable opportunity to act on it, similar to a stop payment order.
Most checks are processed through automated systems, which rely on digital images and electronic data rather than manual review of the date. These electronic systems, often operating via the Automated Clearing House (ACH) network, are designed for high-volume, rapid processing. Consequently, a bank’s automated processes may not detect or act upon a future date written on a check. This means a post-dated check can be processed and cleared immediately upon deposit, regardless of the issuer’s intent to delay payment.
Implications for the Check Issuer
When a post-dated check is deposited and processed early, the issuer faces financial repercussions. If the issuer’s account lacks sufficient funds to cover the check, it may be returned unpaid, known as bouncing. This situation can lead to the bank charging non-sufficient funds (NSF) fees or overdraft fees.
These fees range from $27 to $35 per item. Repeated instances of insufficient funds or overdrafts can negatively affect the issuer’s banking relationship. Such negative activity, including unpaid balances or account closures, may be reported to specialty consumer reporting agencies like ChexSystems. A negative ChexSystems report can hinder the issuer’s ability to open new checking or savings accounts with other financial institutions for up to five years.
Implications for the Depositor
Depositing a post-dated check early also has consequences for the depositor. While the check may be accepted, funds availability depends on the issuer’s account balance. If the check writer’s account lacks the necessary funds, the deposited check will be returned unpaid to the depositor’s bank.
When a deposited check bounces, the depositor will not receive the funds, and their bank may charge a “deposited item returned fee” or “returned deposit item fee.” These fees average around $12.85. A returned check impacts the depositor’s account balance and bank standing. Furthermore, depositing a check earlier than intended can strain the relationship with the check issuer, as it goes against the agreed-upon payment timeline.