When you write a check, it is critical to have the funds available in your checking account. You should also assume that the money is gone from your account as soon as you make the payment. That said, in most cases, the check won’t clear for several days (or longer) after you write a check.
When Does Money Leave Your Account?
When you pay with a check, the funds typically don’t leave your account until your payee’s bank requests the money from your bank. As a result, it may be possible to pay with a check even if you don’t have funds available in your account.
It may be illegal to pay with a check when you know that there’s no money backing up the check.
It happens every day, and severe consequences are unlikely (unless you intentionally defraud others or write an especially large check), but it’s not worth testing your luck.
The speed of check processing depends on several factors, including how and when the check is deposited. However, in some cases (such as with online bill payments that you schedule with your bank), the payee doesn’t even need to deposit the check—funds will be deducted from your account when your bank makes the payment.
In most cases, your payee will deposit your check at their bank or credit union. That bank will then request payment by forwarding a copy of the check (or the check itself) to your bank. When your bank pays the other bank, the funds are removed from your account. This process typically takes several business days.
If your payee makes remote check deposits, the process goes faster. Payees can deposit checks electronically using a mobile phone, computer, or check scanner attached to a cash register. Your check will be converted to an image, and that image will be sent to all the banks involved electronically. Essentially, electronic deposits eliminate the need (and the time it takes) for your payee to physically get your check to the bank.
If the Payee Cashes the Check
In some cases, a recipient can cash your check and get funds from your account on the same day you pay with a check. To do so, they’ll need to take the paper check to your bank (or a branch linked to the same institution you use for your checking account). You’ll need to have 100% of the money required available in your account for the check to be cashed. If you’re short on funds, the request to cash the check will be denied, and you’ll owe fees to your bank. Plus, the payee may have the right to charge you additional fees.
How to Avoid Bouncing Checks
To avoid all of the problems that come from bouncing a check, make sure you know how much you have available to spend—and don’t spend a penny more.
It’s both easier and harder to manage your checking account than it was 20 years ago.
- The bad: You can spend from your checking account in several ways, and you might not know exactly when charges are going to hit your account. It’s especially tricky when you make purchases with your debit card and when bills get paid automatically via ACH.
- The good: It’s easier than ever to know what’s going on in your account. Viewing your account balance and transactions is easy and convenient with your computer or mobile device. You can also employ text messages for quick updates.
Balance Your Checkbook
The best way to avoid problems with your bank account is to balance your checking account regularly. Although it’s not foolproof, this process helps you understand what’s happening now—and what will happen in the future. Be aware of when automatic deductions leave your account (utilities or mortgage payments, for example), note any checks or debit card purchases, and keep track of any outstanding checks that reduce the amount you can spend. To help with tracking, use a check register or spreadsheet.
Watch for Holds
It’s also easy to assume that you can spend money after you make deposits. If you deposit cash, that’s true—you can spend immediately. But you may have to wait a day or two before getting access to the full amount of deposited checks. Your bank’s policies probably allow you to spend a portion immediately, and the rest becomes available as the check clears.
Spend With a Credit Card
Credit cards are loans, but you won’t pay interest as long as you pay the entire balance every month. They’re great tools for everyday spending because they don’t withdraw directly from your checking account like debit cards do (whether you make a mistake or a merchant does, your checking account will be unaffected). Plus, they have other consumer-friendly benefits.
Link Your Savings Account
If you frequently run low on checking funds, look at ways to avoid or reduce overdraft charges. One of the least expensive options is to link your savings account to your checking account. If you empty your checking account, the bank will move funds from savings (and charge a modest fee — typically less than you pay for insufficient funds).
Be Careful With Checks
Don’t write checks when you don’t have the funds available, even if you think the funds will be there in a few days. It’s easy for payments to clear faster than you expected or for deposits to clear more slowly than you hope. If you find yourself tempted to write bad checks, that’s a sign that something needs to change (either your spending habits or the tools you use for cash-flow). Bouncing checks creates numerous problems, and making it a habit can eventually bring down your credit scores.
How Long Do You Have to Stop Payment?
If you made a payment that you realize was a mistake, request a stop payment as soon as possible.
You might have several business days to cancel a payment, but there’s nothing you can do if a payee goes to a bank branch and cashes the check before you complete the process (the funds can be pulled from your account instantly).
Contact your bank and ask how to stop payment on your check. In many cases, a verbal request will work temporarily (typically two weeks), but you’ll need to follow up in writing for longer periods of time.