Talk about a lousy spot to land in.
Payment apps like Venmo make it convenient to send and receive money without having to deal with the hassles of writing out or depositing an actual check. But maybe you have someone in your life who prefers to go the old school route by writing out checks. Or maybe some of your family members like to write you a check for your birthday or during the holidays.
Often, the process of depositing a check into a bank account is a smooth one, as is cashing a check. But what if that transaction doesn't go through?
Believe it or not, in that situation, you're not just stuck in an awkward spot. You may be liable for fees -- even though you weren't the one who wrote a bad check in the first place.
When you have to pay for someone else's mistake
Sometimes, people write bad checks not because they're trying to be shady, but because they simply lose track of their checking account balances. So, let's say a friend owes you $100 and they write you a check for that sum. If you go to cash or deposit it and it bounces because they only have $40 in their bank account at the time, you won't be able to get your money. Annoying, right?
But you may be unpleasantly surprised to learn that in that situation, you could end up being charged a fee by your bank for trying to cash or deposit that cash. This is known as a returned check fee, and SoFi says that it could easily cost you $30 or $35 for a single incident. Ouch.
What to do if someone writes you a bad check
If you've received a bad check from someone you know and trust, your only move is really to talk to the person who wrote it and explain what happened. For example, say your friend unknowingly wrote you a check for $100 when they insufficient funds in their bank account. In that case, your friend might be quick to offer you an apology -- and issue you a new check once their account balance rises.
That said, a good way to avoid landing in a situation where you're sitting on a bad check is to ask to get paid in cash. Granted, if it's your 85-year-old grandmother sending your Christmas gift by mail, that may not work. But if a friend owes you money, you can simply state that you prefer to be reimbursed in cash.
Another thing to keep in mind is that you should never attempt to cash or deposit a check from an unknown source. It's one thing to cash or deposit a check from your credit card company when it owes you money. But if you receive a check from an organization you've never heard of, or a person you don't know, don't just take the money.
In some cases, you could end up falling victim to a financial scam by trying to cash or deposit that check. And also, knowingly depositing a bad check could put you at risk of being charged with fraud -- and proving that you simply made a silly mistake isn't always so easy.
Meanwhile, if you're someone who still writes checks, a good practice is to maintain a ledger so you're tracking those payments. That way, you won't have to be the person who causes someone else a headache when they go to cash or deposit your check only to have it bounce on them.
FAQs
You won't get in trouble if you cash a check that bounces, but you can end up having problems with your bank. The bank is likely to withdraw the funds from your account and charge you a fee for the reversed transaction.
What happens if you cash a bad check unknowingly? ›
If you unknowingly deposit a counterfeit check, it's impossible to access those funds. They're gone. Worse, the bank might hold you personally liable for any losses they incur if the check was fraudulent. Then there is a risk that a criminal investigation may be opened if the check is determined to be counterfeit.
What happens if you try to cash a check and it bounces? ›
A rejected check may result in a nonsufficient funds fee, also known as an NSF or returned item fee. You could face this penalty if your bank doesn't cover the check, it bounces and returns to your financial institution. The fee could be as high as $35 or more.
What happens if someone tries to cash a stopped check? ›
If the payee is not notified about the stop payment order and try to cash the check, it will come up as void.
How many times can you try to cash a bad check? ›
However, there are no laws that determine how many times a check may be resubmitted, and there is no guarantee that the check will be resubmitted at all. Overdraft or insufficient funds fees can be assessed each time the check is submitted.
Can I go to jail for depositing a bad check? ›
According to federal laws, intentionally depositing a fake check to get the money that is not yours is an act of fraud. Just like any other act of fraud, you can go to jail or face fines.
What happens if you accidentally try to cash a fake check? ›
The bank will typically debit your account for the amount of the fake check, and may also charge you a processing fee. You'll lose any money you sent to the scammer.
Do you get notified if a check bounces? ›
When a check bounces, several steps are taken. “First, the bank notifies the payee and charges a bounced check fee to the account holder. That in turn may lead to a negative account balance or additional overdraft fees if funds are insufficient,” said Earle.
Who pays the fee for a bounced check? ›
When there are insufficient funds in an account, and a bank decides to bounce a check, it charges the account holder an NSF fee. If the bank accepts the check, but it makes the account negative, the bank charges an overdraft fee.
How long does it take to find out if a check is bad? ›
The time it takes for a check to bounce can vary, but it generally takes a few days to a week. When a check is deposited, the payee's bank will submit it to the payer's bank for verification. If the payer's bank identifies insufficient funds or other issues, the check will be returned unpaid.
If the check bounces, however, not only will you not get the money, but your bank may charge you a returned check fee. If you go to the issuing bank to cash the check, you can usually receive the entire amount. This is because the bank has more immediate access to the account being drawn from for the funds.
What happens if I try to deposit a cancelled check? ›
A canceled check is one that has been cleared by cashing or depositing it, rendering the check null and void for further transactions.
What happens if you write a check that never gets cashed? ›
A check becomes outstanding when the payee doesn't cash or deposit the check. This means it doesn't clear the payor's bank account and doesn't appear on the statement at the end of the month. Since the check is outstanding, this means it is still a liability for the payor.
What happens if someone writes you a bad check and you deposit it? ›
What happens if someone writes you a bad check and you deposit it? If you deposit a bad check, the bank may later withdraw the funds from your account and charge you a non-sufficient funds fee. You could also be charged an overdraft fee if the withdrawal causes your account balance to go into the negative.
Will a check still clear with insufficient funds? ›
When you cash or deposit a check and there's not enough funds to cover it in the account it's drawn on, this is also considered non-sufficient funds (NSF). When a check is returned for NSF in this manner, the check is generally returned back to you.
What is the longest you can go without cashing a check? ›
Personal, business, and payroll checks are good for 6 months (180 days). Some businesses have “void after 90 days” pre-printed on their checks. Most banks will honor those checks for up to 180 days and the pre-printed language is meant to encourage people to deposit or cash a check sooner than later.
What happens if I accidentally wrote a bad check? ›
A bad check is also known as a hot check and writing one is illegal. Banks normally charge a fee to anyone who unintentionally writes a bad check. The punishment for trying to pass a bad check intentionally ranges from a misdemeanor to a felony.
Can you cash a slightly damaged check? ›
Do you have a torn check and wonder if it can still be cashed? You can, in fact, cash a torn check quite easily. This is because most financial institutions now accept checks with minor damage. However, in order for you to be able to cash a torn check, certain information needs to be fully visible.
What is the penalty for cashing a check that's not yours? ›
California Penal Code § 476 prohibits check fraud. This occurs when you make, pass, utter, or publish a fake or fraudulent check seeking to obtain something of value. PC 475 check fraud can be charged as a felony or a misdemeanor. carries a maximum sentence of up to 3 years in jail.
