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How Long to Wait After Depositing a Check

The Longer the Better - Especially if it's a Biggie

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Question: I received a check from somebody, but I don’t know if the check is any good. I deposited it in my bank account, and am waiting to see if the check will bounce. How long should I wait before spending the money? What happens if I spend the money and it turns out that the check was not good? Is there any guarantee from the bank that I’m clear to spend the funds?

Answer: This is always a difficult situation to deal with. The best advice is to avoid accepting checks when you’re not confident about whoever gave you the check. However, in this case it’s not an option to get paid with something else -- the check is already at the bank.

30 Days is a Good Start

It’s not clear exactly how long you should wait before spending the money, but you might want to wait at least 30 days. If the check is from a foreign bank, you should wait a little longer. This may not be an option if you need the money, but you have to understand that checks are not always returned as quickly as you might expect them to be.

If there’s a problem with the check, you’ll hear about it within 30 days in most (but not all) cases.

The Risks

Consider the risks in this situation: you don’t know whether or not the check writer’s funds will ever show up in your bank account. Your bank may say that the check is “cleared” and show those funds as part of your available balance -- but that doesn’t mean the money has arrived (or that it ever will).

Banks make a certain portion of your deposit available fairly quickly, and they might even allow you to withdraw 100% of the deposit. This is a nice customer service, and it allows you to use the funds while they settle things behind the scenes. Unfortunately, you’re responsible for the money; if the check ends up bouncing after you’ve withdrawn the money, you have to come up with the cash somehow and reimburse the bank.

If a check is large enough to cause problems in your account, be especially careful. You may end up with a negative account balance, you may be unable to pay other important bills, and all of this may lead to hefty bank fees and inconveniences. If the check is small, go ahead and spend the money if you’re willing to absorb any losses.

Asking Your Bank for Confirmation

You might be tempted to ask your bank whether or not a check has cleared. While this is quite reasonable, it may not be as helpful as you’d hope. Bank employees often don’t know exactly what your concerns are with the check, and sometimes they don’t even know that checks can bounce long after they’ve been deposited.

Many customers have been told that a check “cleared,” only to find out later that the check was no good. If things go sour, it’s not the bank’s problem or the customer service representative’s problem -- it’s your problem.

If you want to find out if a check has cleared, explain your concerns to somebody at the bank. It’s best to talk to somebody that you trust and know is competent. Speak to a manager or visit the bank in person to be sure that there is no confusion.

Alternatives to Checks

If you’re worried about bouncing checks, request payment in different forms. The safest way to get paid is via wire transfer. The money will only show up if it really exists, and the transaction cannot be reversed. You can also ask for cashier’s checks or money orders; just be aware that those documents are sometimes faked (so you can run into the same problems you’d have with a bad check).

You can also use newer forms of payment. Some payment networks such as PayPal allow you to receive funds from customers and friends. However, you should research whether or not those payments can be reversed, and under what circumstances.

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