When a check bounces, it means that the writer of the check has insufficient funds available to fulfill the payment amount on the check to the payee. The bank declines to honor the check and "bounces" it back to the account holder, who is typically charged a penalty fee for nonsufficient funds (NSF) . The consequences of a bounced check include:
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Overdraft fees: If a person or business receives your check and deposits it at their bank, and you dont have enough money in your account to pay it, your bank may still decide to approve the check if youve opted for overdraft protection. In this case, you may first be subject to an overdraft fee.
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Penalty fees: Your bank likely will charge you an NSF fee for bouncing a check. The average NSF fee is $26.58.
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Merchant fees: If you wrote a check that bounced, the company you were trying to pay may charge you a late fee if the bounced check means your payment is now overdue.
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Legal trouble: Additional penalties for bouncing checks may include negative credit score marks, refusal of merchants to accept your checks, and potentially legal trouble.
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Banking restrictions: Writing too many bounced checks may prevent you from paying merchants by check in the future. Many merchants use a verification system called TeleCheck to help them determine if a customers check is good.
If you deposit a check that doesnt clear, you wont be charged an NSF or overdraft fee, but you might have to pay a returned check fee. In addition, its important to note that it is illegal to write a check that you know will bounce, and it can be classified as a misdemeanor or even a felony depending on the amount involved.
