Bounced Check: The True Costs and What You Can Do

Bouncing a check can result in overdraft, NSF and merchant fees — and even criminal charges. Steps to take include contacting the bank and check recipient and paying up quickly.

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What is a bounced check?

A bounced check is one that is returned — or bounced — to its original bank because the money is not in the check writer’s account to process it. This can lead to a number of fees, and probably some headaches. One so-called rubber check could end up costing $65 or more. If there’s a risk you won’t have the funds to cover a transaction, you’re better off not writing a check for it.

» Want to lower bank costs? Read our primer on how to avoid overdraft fees

Bounced check fees: Overdraft and NSF

The first fee you could face technically may not be for a returned check. When a person or business receives your check and deposits it at their bank, if you don’t have enough money in your account to pay it, your bank may still decide to approve the check if you’ve opted for overdraft protection. But your account balance would go negative, and you would probably be charged an overdraft fee to compensate your bank for the inconvenience. The fee is usually around $35 per transaction.

Another option is to have a backup account, such as savings or a line of credit, from which funds could be transferred to your checking account if an overdraft occurs. Some banks and credit unions charge transfer fees for this option, but the fees are usually much less than overdraft charges.

If you don't pay the amount of a bounced check within the time frame your bank specifies, it can close your account. You could then end up in the ChexSystems database, which many banks use to screen people who apply for new bank accounts.

If your financial institution doesn’t cover the check, it bounces and is returned to the depositor’s bank. You’ll likely be charged a nonsufficient funds fee, also known as an NSF or returned item fee. This costs about the same as an overdraft fee — around $35.

If the check is returned to a business, it may also add on some charges.

Merchant fees

Many states allow merchants to charge customers up to $30 for the work of handling a bad check. Add that to the typical nonsufficient funds fee, and you’re looking at $65 for one transaction.

Utility companies and landlords may charge a similar bounced check fee if it’s in the contract you signed.

In addition to the fees directly related to bounced checks, there can be other problems. For example, a landlord might also have the ability to evict you if you don’t pay the rent plus charges.

You can get written up

If you bounced your check with a merchant, you may be listed in a database maintained by TeleCheck, a consumer reporting agency. Many merchants use this agency’s database or a similar one before they take your check. It screens transaction histories to weed out people with a history of fraud or bounced checks. If you’re in the database, retailers may decline to accept checks from you in the future.

Your bank may close your account

If you don't pay the amount of a bounced check within the time frame your bank specifies, it can close your account. Then, you could end up on the database of another reporting agency, ChexSystems. This agency collects information on people who mishandle bank accounts, including checks, to the point that those accounts are closed. Many banks use ChexSystems to screen people who apply for new bank accounts, so getting written up can affect your chances of opening a new bank account at the same time your old account is closed.

» What to know if you're blacklisted by ChexSystems

If you bounce a check, take these steps

  • Reach out: If you bounce a check, contact your bank and the person or company that received your check as soon as you're aware of the mistake. Explain your situation as a way of showing your good intentions.

  • Pay up: As long as you pay up as soon as possible, a bounced check isn't likely to appear on a credit report, so it probably won’t hurt your credit score. If the check goes unpaid, however, it becomes an outstanding debt, and that can be reported by a bank, merchant or debt collection agency to the major credit reporting bureaus: Experian, Equifax and TransUnion.

  • Don't bounce 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. Simply put, don’t write a check if you don’t have enough money in your checking account.