Loading the player...

What is a 'Bounced Check'

A bounced check is slang for a check that cannot be processed because the account holder has non-sufficient funds (NSF). Banks return or bounce these checks, also known as rubber checks, rather than honoring them, and banks charge the check writers NSF fees. Passing bad checks can be illegal, and the crime can range from a misdemeanor to a felony, depending on the amount and whether the activity involved crossing state lines.

BREAKING DOWN 'Bounced Check'

Many times, bad checks are written inadvertently by people who simply are unaware that their bank balances are too low. To avoid bouncing checks, some consumers use overdraft protection or attach a line of credit to their checking accounts.

Are There Fees for Bounced Checks?

When there are insufficient funds in an account, and a bank decides to bounce a check, it charges the account holder an NSF fee. If the bank accepts the check, but it makes the account negative, the bank charges an overdraft (OD) fee. If the account stays negative, the bank may charge an extended overdraft fee. Different banks charge different fees for bounced checks and overdrafts, but as of 2016, the average overdraft fee is $34. Banks usually assess this fee on drafts worth $24, and these drafts include checks as well as electronic payments and some debit card transactions.

What Happens When a Check Bounces?

Bank fees are just one part of bouncing a check. In many cases, the payee also assesses a charge. For example, if someone writes a check to the grocery store and the check bounces, the grocery store may reserve the right to redeposit the check along with a bounced check fee. In other cases, if a check bounces, the payee reports the issue to debit bureaus such as ChexSystems, a bureau that collects financial data on savings and checking accounts. Negative reports with organizations like ChexSystems can make it hard for consumers to open checking and savings accounts in the future. In some cases, businesses collect a list of customers who have bounced checks, and they ban them from writing checks at that facility again.

How to Avoid Bounced Checks

Consumers can reduce the number of bounced checks they write by tracking their balances more carefully, using an ironclad system of recording every single debit and deposit on a check register as soon as it occurs, or keeping close tabs on their checking account using online banking. Consumers can also fund a savings account and link it to their checking account to cover overdrafts. Alternatively, consumers may opt to write fewer checks or use cash for discretionary spending.

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

  1. Bad Check

    A bad check is a check drawn on a nonexistent account or on an ...
  2. Certified Check

    A certified check is a type of check for which the issuing bank ...
  3. Outstanding Check

    An outstanding check is a financial instrument that draws on ...
  4. Crossed Check

    A crossed check is a check that is crossed with two parallel ...
  5. Canceled Check

    A canceled check is a check that has cleared the depositor's ...
  6. Overdraft Protection

    Overdraft protection is a line of credit that banks offer to ...
Related Articles
  1. Personal Finance

    How to Cancel a Check

    If you've had a personal check lost or stolen, the next best step is to cancel the check by calling your bank and putting a stop payment on the check.
  2. Personal Finance

    Top Checking Accounts With No Overdraft Fees

    Choosing the right checking account could save you hundreds of dollars in fees every year.
  3. Personal Finance

    5 Bank Fees You May Not Know About

    Banking regulations have recently changed and fees are following suit.
  4. Personal Finance

    The Ins And Outs Of Bank Fees

    These service charges could nickel and dime you right out of your nest egg.
  5. Personal Finance

    When Good People Write Bad Checks

    Overdraft protection can help when you overestimate your balance, but it will cost you.
  6. Managing Wealth

    Changes To Your Checking Account

    Checking accounts have evolved a lot over the years. Here are the five biggest changes that can affect your wallet.
  7. Personal Finance

    Best Checking Accounts For Couples

    Being a couple, especially if you both have jobs, can help you qualify for benefits and fee waivers that would be tougher to get on just one salary.
  8. Personal Finance

    Cut Your Bank Fees

    Find out how to get the bank to pay you for using their services, not the other way around.
  1. How does bouncing a check affect my credit score?

    Learn the many indirect effects on your credit score when you bounce a check. Read Answer >>
  2. How do you calculate payback period using Excel?

    Understand the various fees that can be assessed on a personal or business checking account, and learn methods to avoid being ... Read Answer >>
  3. Reading the pros and cons of overdraft protection

    The good news: Checks always clear. The bad: The bank will charge you an overdraft fee, even though you’re using your own ... Read Answer >>
  4. What US banks offer free checking accounts?

    Quit wasting money on monthly fees associated with your checking account and get a free checking account from reputable national ... Read Answer >>
  5. How does your checking account affect your credit score?

    Learn how your checking account relates to your credit score, as well as what types of banking activities do and do not get ... Read Answer >>
  6. What Are the Pros and Cons of Online Checking Accounts?

    Learn about the ways an online checking account can save you time and money, but understand the drawbacks before signing ... Read Answer >>
Trading Center