QS Study

Bounced Cheque

When a cheque is refused by a bank and returned to the person who wrote it due to insufficient funds, it is called a bounced cheque. Cheques should be written for an amount that is less than or equal to the account balance at the time the cheque is deposited or cashed by the recipient. It is non-sufficient funds check that cannot be processed because there isn’t enough money in the account to clear it. It is slang for a check that cannot be processed because the account holder has nonsufficient funds (NSF). Rarely, a check can bounce due to a minor, accidental misfortune.  However, there are other more severe situations which can contain criminal movement. Further, the passing of bad cheques can be illegal, and this crime can be aggravated depending on the amount and whether this action involves crossing state boundaries.

In the event that the account balance is lower than the amount of the cheque at the time, it is deposited or cashed, the bank may not honor the cheque and, in most cases, will return it to the recipient with a penalty fee attached. To avoid bouncing checks, some consumers use overdraft protection or attach a line of credit to their checking accounts. Consumers can decrease the number of bounced checks they write by tracking their balances further cautiously, using an ironclad method of recording every single debit and deposit on a check register as soon as it occurs, or by keeping close tabs on their checking account using online banking.

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