Financial institutions impose a bank charge of $25-40 for a bounced check to cover their administrative costs. A check is not cleared by a bank when there are insufficient funds in a customer's checking account. This normally happens as a direct result of customer oversight, rather than specific intent, as the majority of customers' survive from paycheck to paycheck and don't have access to surplus cash.
Reasons for a Bounced Check
- A customer didn't realise that a payment had come out of their account as they had not checked their bank statement or online balance.
- Interest has been added for using an overdraft facility. This has left less money available to cover the cost of goods and services.
- A partner has sent a check to pay for something else so the money has already been spent.
- An employer fails to pay an employee on-time.
- An intention to purchase goods and services without paying.
How to Prevent Bank Charges
- Bank statements. Bounced checks can be avoided by regularly checking bank statements to see how much money is or isn't available. Paper statements only arrive monthly so it is important that a customer signs-up for online banking.
- Personal records. Maintaining a record of all incomes and expenditures in a spreadsheet will help a consumer avoid unnecessary bank charges and fees. Reconciling these figures against an online bank statement will help maintain better control of personal finances.
- Real time balance. A quick online balance check can help prevent bounced checks. Susan Zimmerman of the Zimmerman Financial Group stated that: "At a bare-bones minimum, look over the summary information and see if the figures are in the ball park."
- Joint accounts. Keep the other party informed of any transactions, particularly if minimal funds are available or an account doesn't have an overdraft facility.
Ask for a Goodwill Gesture
All financial institutions are able to waive bank changes in relation to bad checks. If there are genuine reasons for this problem cropping-up or financial difficulties are being experienced, why not ask if the bank is prepared to waive the fee as a goodwill gesture? Whilst there is no obligation for them to do so, it is worth asking, particularly if a long term customer who has never had this problem before.
A busy lifestyle is the main reason for consumers incurring bank charges. Not monitoring bank statements or arranging a sufficient overdraft facility can result in a bounced check, particularly if sharing a joint account. At the very least, customers' should monitor their real time balance before writing a check.
Readers that found this article useful may also be interested in identifying the best credit card deal, discovering how effective credit card debt settlement is or finding out how to avoid identity theft.
Sources
McCune, Jenny. (16 July, 2004). "7 ways to keep your bank account in check." The Boston Globe.
Disclaimer: This article in no way attempts to give legal or tax advice. One should consult a licensed attorney, tax advisor, or other qualified professional.
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