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Outstanding Checks

Overview of Outstanding Checks - Risks and Pitfalls

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An outstanding check is a check that that you wrote, but has not yet hit your account.

The money is still in your account because your bank has not taken the funds out.

Example of Outstanding Checks

Assume you write a check to your favorite store on Monday. In your mind, the money you wrote the check for is gone - you can’t count on using it again.

However, the store may not deliver the check to their bank (or deposit it) until Wednesday. If you log in to your account, you may see that the money is still in your account, or that the check has not "cleared" yet. You can say you have an outstanding check out there.

Even after the store deposits your check at their bank, it may take a few days before the money comes out of your account. The money only leaves your account when the store’s bank demands the money from your bank.

Outstanding Check Pitfalls

The process can take time if the people involved move slowly. However, electronic check clearing processes can dramatically speed up check clearing. Since you never know how long your check will remain outstanding, you should plan on the money leaving your account instantly - otherwise you risk overdraft fees. Don’t rely on "float time" to get money into your account.

How to Keep Track of Outstanding Checks

By keeping a check register and balancing your checking accounts, you know how much money you really have to spend.

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