Bounced Check

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DEFINITION of 'Bounced Check'

A slang word for a check that cannot be processed because the writer has insufficient funds. A bounced check will often be returned to the writer along with a penalty fee for non-sufficient funds. "Passing" bad checks is illegal, and the crime can range from a misdemeanor to a felony, depending on the amounts involved and whether the activity involved crossing state lines.

Also known as a rubber check, dishonored check, or bad check.

BREAKING DOWN 'Bounced Check'

Many times, bad checks are written inadvertently by people who simply were unaware that their bank balances were too low. It is always a good idea to have a small overdraft line of credit to cover such situations, or keep a close eye on your balance near bill-paying time.

When there are insufficient funds in an account, the bank will "bounce the check" (refuse to honor it). Banks and vendors frequently charge fees for bounced checks, sometimes exceeding the amount for which the check was written. Online banking can help to avoid writing bad checks by allowing you to view your balance more frequently. Consumers can also create a backstop account that is automatically debited if the primary checking account is too low to pay a specific check.

Learn more about the consequences of bouncing a check, read How does bouncing a check affect my credit score?

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