Fees, Fees, Fees
If you bounce checks because you misjudged your payee’s efficiency, you’ll have to pay fees. Your bank may cover the check if you’ve got an overdraft protection plan on your account, but it will likely cost you. Fees have been rising steadily over the years, and you can expect to pay $30 or more for this protection.
If you don’t have overdraft protection on your checking account, your bank will probably charge a fee for bouncing the check – and they’ll deny payment to your payee.
If you bounce a check and your bank won’t pay, you can get into lots of trouble. First, your payee may charge a “returned check” fee. They don’t like to get bad checks, so they charge you to discourage you from writing them.
Other Complications
Depending on the type of business you write the check to, things can get complicated. Most mortgage companies won’t foreclose on your home if you bounce a check, but they may report late payments if it takes a while for the money to actually reach them. In addition, bouncing a check may be a violation of your contract. Some credit card companies will increase your rate (or remove any promotional rates) if you bounce a check or pay late. Other credit card companies might join in the feeding frenzy if you have a universal default clause.
Finally, you may end up on a list of people who have a history of misusing their checking accounts. ChexSystems and other small consumer reporting companies keep track of individuals who bounce checks. If you get a reputation for being irresponsible, banks, retailers, and others may not want to do business with you.
