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.
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FAQs
Sometimes, the bank will also charge you a returned check fee or impose other penalties for depositing the bad check. Your bank may notify you about the bounced check, but they are not required to. It's important to monitor your own accounts to make sure the funds from a check clear in your account.
What happens if I try to cash a bad check? ›
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.
What happens if you cash a check 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. This allows you to redeposit the check at a later time, if available.
What happens if you fail to cash a check? ›
The check may be voided after a certain amount of time. Most checks have an expiration date, typically six months to a year after the date they were issued. If you don't cash the check before the expiration date, it may be voided and you won't be able to cash it at all.
Can you retry a bounced check? ›
Generally, a bank may attempt to deposit the check two or three times when there are insufficient funds in your account. 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.
Can you cash a slightly damaged check? ›
Q: Can I cash a check that is torn or damaged? A: If a check is slightly torn or damaged, but all the critical information is still legible (such as the amount, the payee's name, and signature), some banks may still accept it.
What happens if I accidentally deposit a fake check? ›
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 will check do if written with insufficient funds? ›
The bank will "bounce" the check if you write a bad one because there are insufficient funds in your account to cover it.
How long does it take for a check to be returned for insufficient funds? ›
How long does it take for a check to bounce? Generally speaking, a check for an amount greater than $225 won't clear until two or more business days after it's deposited at a bank. 6 In the same vein, it typically takes at least two business days for a bad check to bounce.
Who pays for a bounced check? ›
A bounced check is a check for which there aren't enough funds in the bank customer's account to cover it. 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).
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 you try to cash an expired check? ›
What Happens If You Cash An Expired Check? If you try to cash an expired or stale check, there's a possibility that both your bank and the bank that issued the check may still honor it. However, it's also possible that your bank might reject the check, and you'll have to ask for a replacement.
Why would a check be declined to cash? ›
Some reasons why a bank won't cash a check include not having a proper ID, not having an account with that bank, the check is filled out incorrectly, or the check being too old. Ensure you comply with all the required criteria before attempting to deposit a check.
Can you try to cash a bounced check again? ›
Maybe. The recipient may or may not resubmit the check, but no laws limit the number of times they can resubmit it. Overdraft and NSF fees can be assessed each time the check is redeposited and bounced. Deposit money to your checking account quickly to cover the check in case it is processed again.
How serious is a bounced check? ›
Avoid bouncing more checks: If you write checks and you're aware that you don't have enough money to cover them, you're breaking the law. You could be charged with a misdemeanor or even a felony, depending on the amount and quantity of the unpaid transactions.
What happens if someone writes you a bad check and you cash it? ›
You may be responsible for repaying the entire amount of the check. While bank policies and state laws vary, you may have to pay the bank the entire amount of the fraudulent check that you cashed or deposited into your account. You may have to pay overdraft fees.
What happens if someone tries to cash a cancelled check? ›
If the payee is not notified about the stop payment order and try to cash the check, it will come up as void. The resulting confusion could cause problems when it comes to their accounting. Reaching out to the payee and explaining what happened can help avoid confusion.
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.
Is it illegal to cash a check written to me by mistake? ›
If a company mistakenly sends you a large check in error, are there legal ramifications if you deposit it? YES. You can be prosecuted for theft. Or sued in a civil court for the money plus interest.
Is it illegal to try to cash a check twice? ›
But in the majority of states, the crime is considered a misdemeanor. If you can just withdraw the extra money and write a check back to the bank that's the best plan. It's unlikely any bank would do anything but take the money back.
