What Is a Bounced Check?
February 4, 2025
A bounced check happens when the issuer of a check does not have enough money in the account, or another issue. Thus, the bank cannot pay the check, causing the bank to return it unpaid, essentially "bouncing" it back to the sender.
It could cause fees, trouble with finances, and sometimes legal problems for the person who wrote the check. In fact, in Indiana, knowingly writing a check without the funds to process the payment is a crime called “check deception.”[1]
Learn why checks bounce, how to handle it, and how to avoid it to manage your money better.
Bounced Check Definition
A bounced check is a check that cannot go through because the account it’s tied to doesn’t have enough money to cover the amount. In other words, the check can't be processed because there aren't enough funds in the bank customer's account to cover it. When this happens, the bank marks the check as unpaid and may return it to the person who tried to cash or deposit it. This could lead to fees for both the person who wrote the check and the one trying to use it.
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How Bounced Checks Work
When you write a check, you tell your bank to pay a certain amount of money to someone else. If you don’t have enough money in your account to cover it, the bank won’t process the payment.
Here is what happens:
The person deposits the check at their bank.
Their bank sends the check to your bank to get the money.
Your bank tries to take the money out of your account.
If there’s not enough money, your bank rejects the check and marks it as “Bounced or Non-sufficient Funds (NSF).”
If you’re on the sending or receiving end, it can throw a wrench into your finances.
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Reasons Why Checks Bounce
Many of the reasons a check can bounce are unintentional, but this isn’t always the case.
Here are some of the reasons a check may bounce:
Not enough funds to cover the transaction.
Closed or frozen account.
Mistakes on the check.
Fraudulent activity.
Error on check.
One common reason a check bounces is when there aren’t enough funds in the account to cover the payment. If the account is closed or frozen, the bank cannot process the check, which would also cause it to bounce. Moreover, errors like wrong dates, amounts, or signatures can cause a check to bounce.
If a check appears to be forged or altered, the bank will flag it and refuse payment. Whether you knowingly deposited the check or not, you can still be on the hook. Such is the case with money mule fraud.
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Fees Associated With Bounced Checks
Both the person writing the check and the person receiving it may face fees, including:
Non-sufficient funds (NSF) fees.
Returned check or chargeback fees.
Merchant fees.
Overdraft fees.
NSF fees can be charged to the person who wrote the check by their bank. Meanwhile, returned check or chargeback fees may be charged to the person trying to cash or deposit the check by their bank.
Businesses sometimes charge extra “merchant fees” to customers who provide bounced checks. And, if the bank covers the check amount and puts the account into negative balance, they may charge an overdraft fee.
To protect your checking account, you may consider using savings funds when this happens. Speak with your financial institution about this transfer option and any potential fees.
What To Do if You Write a Check That Bounces
If you write a check that bounces, take these steps to fix the problem:
Apologize and let the recipient know you are working to resolve it.
Deposit enough money to cover the check and any fees.
Be ready to pay any fees the other person or their bank has to deal with.
Explain the situation and ask for advice on how to prevent this from happening again.
If you unknowingly wrote the check without the funds to cover the transaction, the recipient and the bank may be willing to work with you.
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What To Do if You Receive a Check That Bounces
If someone gives you a check that bounces, here’s what you can do:
Contact the person who wrote the check. Let them know the check didn’t go through and ask for payment another way.
If they assure you the funds are now available and you trust their word, you can try depositing the check again. Otherwise, ask for another form of payment, like cash.
If you’re a business and you told your customers there is a returned check fee and the amount, you may want to consider charging the fee to cover your costs, but speak with your legal professional about your options.
If they refuse to pay, you may need to take legal steps to recover the money owed.
In Indiana, you may be able to collect payments via a private collection agency or by filing a civil lawsuit. Before you take action, consider consulting a legal professional. Make sure you know how Indiana’s debt collection laws may apply to your unique situation.[2]
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Tips To Avoid Bounced Checks
To prevent writing or receiving bounced checks:
Monitor your checking account and keep track of your balance.
Set up overdraft protection.
Double-check the check details.
Notify your bank about large checks.
Use electronic payments.
By staying proactive and using these strategies, you can avoid the hassle and costs of bounced checks.
Protect Your Account With Centier by Your Side
Bounced checks can be a hassle, but Centier offers solutions to help you avoid them. To learn more about these services, opt-in to overdraft protection, or discuss how Centier can support your financial goals, schedule an appointment today.
Sources:
[1] https://law.justia.com/codes/indiana/2017/title-35/article-43/chapter-5/section-35-43-5-5/
