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Bad check, bogus check, bounced check, bouncing paper, insufficient fund check, kited check, OD, overdraft, overdrawn account, non sufficient fund check, NSF check, rubber check. Whatever you want to call it, it'll cost you a lot money if you accidentally write one.
There are some 450 million bad checks written each year that bring in more than $5 billion dollars in fees and penalties to banks. If you write a bad check, your fees don't necessarily stop with the bank. Writing a bad check is a <A HREF="http://www.ckfraud.org/penalties.html">criminal act in every state</A> with fees that can be as high as $1000 not counting court and attorney fees. That makes taking the time to make sure you don't write a bad check well worth the time and effort.
The first thing you need to do is balance your check book. While balancing your check book is technically not a difficult task to do, the statistics say that you probably don't do it. According to Moebs Services, an economic research firm, 87% of consumers don't balance their checking accounts. If you don't know how much money is in your account, however, you're much more likely to bounce a check or incur some other type of bank fee. Many people assume that they can rely on their ATM receipts to keep track of their checking balance, but these do not show outstanding checks. They may also not show debit card transactions.
Once you have your checkbook balanced, continue to do so faithfully. Get in the habit of entering all checks, automatic withdrawals, service charges, etc. at the time they occur so that you don't forget. It's important to remember that the bank is not your friend when it comes to taking out more money than you have in your checking account. Some consumer groups claim that banks actively try to get you to do this. Why? because they can charge huge fees (at your expense) to you if you do to the tune of $5 billion a year.
In addition to faithfully balancing your checkbook, you'll want to take some precautions to make sure that you don't accidentally bounce a check. If you find that you account come close to not having funds from time to time, you will want to sign up for overdraft protection. You will have to request over draft protection from the bank. Many banks now offer "courtesy overdraft protection" which you don't have to sign up for, but <A HREF="http://www.savingadvice.com/forums/showthread.php?t=1093">courtesy overdraft protection is stacked with huge fees</A> and doesn't guarantee that your check will be covered like overdraft protection does.
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Another step you can do to protect your self is to make your own self imposed overdraft protection. You can do this by adding an extra $100 into your checking account, but not recording it in your balance thus giving you a $100 cushion. Another way to do this is to round all your checks up so they are more than they actually are. By doing this you will build a cushion into your account after a few months that can be your safety net.
You also need to be very careful of "stale checks." These are checks that you have written, but for whatever reason they have not been cashed. While banks don't have to honor checks that are more than 6 months old, it's ultimately their discretion on whether or not to cash them. Most will honor the check if there is no written statement on the check that says it is only good for a certain period of time. If you have one or more stale checks in your account try contacting the person to whom you wrote the check to see why it hasn't been cashed. If that is not possible, put a stop payment on the check.
A new way that you can get in trouble is if you have gotten into the habit of "floating checks" (writing a check when you know you don't have enough money in your account, but knowing it will take several days before the check is recorded against your account and you'll have the money in your account by then. People often used this float at the end of the month a couple of days before their paycheck was to be deposited). If you have been in this habit in the past, it's time to get out of that habit right now. A new law took effect in October that means the 1 to 5 day period that you used to have before money for a check you had written would be withdrawn ("the float") from your <A HREF="http://www.savingadvice.com/forums/showthread.php?t=2396">checking account will disappear</A>. If you don't adjust your ways, this change will make it much more likely that you bounce a check.
By taking these precautions and making sure that your checking account balance is always up to date, you place yourself in the position to avoid bounced checks and the hefty costs that go along with them.
There are some 450 million bad checks written each year that bring in more than $5 billion dollars in fees and penalties to banks. If you write a bad check, your fees don't necessarily stop with the bank. Writing a bad check is a <A HREF="http://www.ckfraud.org/penalties.html">criminal act in every state</A> with fees that can be as high as $1000 not counting court and attorney fees. That makes taking the time to make sure you don't write a bad check well worth the time and effort.
The first thing you need to do is balance your check book. While balancing your check book is technically not a difficult task to do, the statistics say that you probably don't do it. According to Moebs Services, an economic research firm, 87% of consumers don't balance their checking accounts. If you don't know how much money is in your account, however, you're much more likely to bounce a check or incur some other type of bank fee. Many people assume that they can rely on their ATM receipts to keep track of their checking balance, but these do not show outstanding checks. They may also not show debit card transactions.
Once you have your checkbook balanced, continue to do so faithfully. Get in the habit of entering all checks, automatic withdrawals, service charges, etc. at the time they occur so that you don't forget. It's important to remember that the bank is not your friend when it comes to taking out more money than you have in your checking account. Some consumer groups claim that banks actively try to get you to do this. Why? because they can charge huge fees (at your expense) to you if you do to the tune of $5 billion a year.
In addition to faithfully balancing your checkbook, you'll want to take some precautions to make sure that you don't accidentally bounce a check. If you find that you account come close to not having funds from time to time, you will want to sign up for overdraft protection. You will have to request over draft protection from the bank. Many banks now offer "courtesy overdraft protection" which you don't have to sign up for, but <A HREF="http://www.savingadvice.com/forums/showthread.php?t=1093">courtesy overdraft protection is stacked with huge fees</A> and doesn't guarantee that your check will be covered like overdraft protection does.
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Another step you can do to protect your self is to make your own self imposed overdraft protection. You can do this by adding an extra $100 into your checking account, but not recording it in your balance thus giving you a $100 cushion. Another way to do this is to round all your checks up so they are more than they actually are. By doing this you will build a cushion into your account after a few months that can be your safety net.
You also need to be very careful of "stale checks." These are checks that you have written, but for whatever reason they have not been cashed. While banks don't have to honor checks that are more than 6 months old, it's ultimately their discretion on whether or not to cash them. Most will honor the check if there is no written statement on the check that says it is only good for a certain period of time. If you have one or more stale checks in your account try contacting the person to whom you wrote the check to see why it hasn't been cashed. If that is not possible, put a stop payment on the check.
A new way that you can get in trouble is if you have gotten into the habit of "floating checks" (writing a check when you know you don't have enough money in your account, but knowing it will take several days before the check is recorded against your account and you'll have the money in your account by then. People often used this float at the end of the month a couple of days before their paycheck was to be deposited). If you have been in this habit in the past, it's time to get out of that habit right now. A new law took effect in October that means the 1 to 5 day period that you used to have before money for a check you had written would be withdrawn ("the float") from your <A HREF="http://www.savingadvice.com/forums/showthread.php?t=2396">checking account will disappear</A>. If you don't adjust your ways, this change will make it much more likely that you bounce a check.
By taking these precautions and making sure that your checking account balance is always up to date, you place yourself in the position to avoid bounced checks and the hefty costs that go along with them.