What Happens If You Deposit a Check That Bounces?

When a deposited check does not clear, it is commonly referred to as a “bounced check,” a “returned check,” or a check due to “insufficient funds.” This occurs when the check writer’s bank account lacks the necessary money or another issue prevents payment. Discovering a bounced check can be frustrating. This article guides you through the consequences and actions to take.

Your Account’s Immediate Financial Impact

When a deposited check bounces, the funds provisionally credited to your account are reversed. The money initially appearing in your balance will be removed, effectively canceling the deposit. Even if you spent these funds, the bank will reclaim that amount once the check officially bounces.

Your bank will charge a “returned deposit item fee” for processing the bounced check. These fees vary, often ranging from $10 to $30 per returned item, depending on your financial institution and account type. This fee covers the administrative costs your bank incurs for handling the failed transaction.

If your account balance was low, the reversal of the provisional credit and the returned deposit item fee can lead to an overdraft. An overdraft occurs when your account balance falls below zero. Your bank may impose additional overdraft fees, which can range from $25 to $35 per transaction that overdraws your account.

These fees can quickly accumulate, potentially turning a small inconvenience into a more significant financial strain. Monitor your account activity closely after depositing checks, especially if you anticipate using the funds immediately. The method of deposit, whether through a mobile app, ATM, or in person, does not change that funds will be reversed and associated fees will apply if the check bounces.

Receiving Notification from Your Bank

Your bank will typically notify you when a deposited check bounces. This notification is crucial for understanding the situation. Common methods include physical mail, email alerts, or messages within your online banking portal or mobile application.

Notifications provide specific details regarding the returned item. They include the bounced check amount and the reason for its return, such as “insufficient funds” or “account closed.” The notification will also state any fees your bank has charged to your account, including returned deposit item fees or potential overdraft fees.

Reviewing these notifications helps you determine next steps, such as contacting the check writer. Timely awareness allows you to address any potential account balance issues and avoid further fees or complications.

Steps to Address the Bounced Check

Upon receiving notification that a check you deposited has bounced, your immediate action should be to contact the check writer. Inform them about the returned check and politely inquire about the reason for the insufficient funds or other issue. Open communication can often resolve the matter quickly.

When discussing repayment, request funds through a more secure method than another personal check. Options like cash, a money order, a certified check, or a wire transfer ensure funds are legitimate and clear without issues. This prevents a recurrence of the bounced check scenario.

Document all communications and attempts to resolve the issue. Keep records of dates, times, conversation summaries, and copies of messages exchanged. This documentation is valuable if the situation escalates and you need to demonstrate efforts to collect funds.

If a new payment is arranged, deposit it safely and wait for funds to fully clear before using them. Your bank can inform you of their hold policies. If the check writer is unresponsive or refuses to pay, consider pursuing civil action, such as filing a claim in small claims court, to recover funds. This legal avenue provides a formal process for seeking repayment, though it is a last resort.

Understanding the Check Writer’s Situation

The individual who wrote the bounced check also faces consequences from their bank. Their bank will charge an “insufficient funds” (NSF) fee or a “returned item” fee for each bounced check. These fees are similar to those charged to the depositor, often between $25 and $35 per item.

Repeated bounced checks can lead to severe repercussions for the check writer. Banks may close the account if a pattern of insufficient funds or frequent overdrafts is observed. This action can significantly impact the individual’s ability to open new bank accounts.

Writing bad checks can negatively affect a check writer’s banking history and financial standing. Information about closed accounts due to misuse, including excessive bounced checks, can be reported to specialized consumer reporting agencies like ChexSystems. This reporting can make it difficult to establish new banking relationships for several years.