When you deposit a check, neither you nor your bank know if the check is likely to bounce. It’s wise to wait before spending the money, but how long is long enough—and what should you do to protect yourself from bad checks?
For starters, don’t assume you’re free of risk, even if the money is available. Learn how long it takes for a check to clear or bounce, and what this might mean for you.
When Deposited Funds Are Available
By law, your bank makes a certain amount of funds available for withdrawal shortly after you deposit most checks. Unless there are clear signs of fraud or other problems, banks follow a funds availability policy, which details how soon you can use your money.
Many types of checks and deposits are required to be available to you the next business day after a deposit is made, including checks that are deposited in person and are:
- From another account at the same bank or credit union
- From the federal or state government
If you deposit any of these checks at an ATM, the funds will be available to you on the second business day after you make the deposit.
Personal checks are a little different. In most cases, your bank is required to make the first $200 from personal checks is available within one business day.
Depending on the type of check, the bank may choose to make even more available. For larger checks, the bank may hold the remainder for several more days before making those funds available.
However, when funds become available doesn’t necessarily signify that the check is good or that your bank actually received those funds from the issuing bank.
It means that they have decided to release that money to you on credit, with the expectation that the check writer's bank will make those funds available shortly and the check will clear.
How Long Does It Take for a Check to Clear?
A check has not necessarily cleared just because the money is availble in your account or appears on a receipt. Federal law requires your bank to make the funds available to you within a certain amount of time, whether the funds actually arrived from the other bank or not.
Checks typically take two to three business days to clear or bounce. At this point, the bank has either received funds from the check writer's bank or discovered that it will not receive those funds.
If the money is transferred without problems, the check has cleared. If the check was fraudulent, or the writer's account could not cover the amount the check was for, then the check is said to have "bounced."
Risks of Bounced Checks
If you know and trust the person or organization that wrote the check, it may be safe to spend the money as soon as it becomes available, even if the check has likely not cleared yet.
But if you don't know or don't trust the check writer, it is safer to wait for the check to clear before you spend any of that money. Otherwise, you could open yourself up to a good deal of financial risk.
Even if your bank allows you to walk away with cash or transfer money out, you might have to replace that money later if the deposited check bounces.
If you have already spent the money, and do not have enough funds in your account to repay what you now owe to the bank, you can end up owing hundreds or even thousands of dollars to your bank.
A reversed deposit can bring your account into the negative, which means all of your payments will bounce until you fix the problem. You won’t be able to use your debit card for purchases, and any checks you’ve written in the last few days will be returned unpaid.
In addition to finding yourself in negative territory, you also risk paying hefty bank fees after you deposit a bad check. Your bank will charge a fee for insufficient funds, as well as potential overdraft charges. The people or businesses that you attempt to pay with nonexistent funds may also charge you fees.
How to Find Out If a Check Has Cleared
The term “clear” can be confusing, and bank employees may use the term loosely. To be safe, find out precisely when money transfers from the check writer’s bank to your bank and avoid spending the money from checks before that.
Bank employees may assume you want to know when you can spend money that’s subject to a hold. They may not know that checks can bounce long after they’ve been deposited.
If you want to verify if a check has cleared, explain your concerns to somebody at the bank who you trust and know is competent. Speak to a manager or visit a branch in person to limit confusion.
What to Do About Suspicious Checks
So what do you do about checks that arouse suspicion?
You will be safest if you avoid accepting and depositing checks if you have any concerns about the payment.
Contact the Bank
If a check seems suspicious or you suspect fraud, you can contact the bank where they are supposed to have originated to find out if the account is genuine.
If you are contacting a bank about a suspicious check, find their customer service phone number online. A number printed on a fake check is likely fake as well.
Wait 30 Days
Finding out about a bad check can take weeks. If you have deposited a check that is suspicious, wait for 30 days before using any of those funds.
Most problems should arise within that timeframe. Checks from fake accounts and empty accounts should bounce within a few weeks, giving you time to avoid debts with your bank. If the check originates from a foreign bank, wait even longer.
Even after 30 days, there may still be some risk. For example, the account holder may claim that the check was written fraudulently. Even though the check cleared, your bank must return the money, and you may need to figure out who scammed you and consult with an attorney about your options for recourse.
Fake Check Scams
You’re taking several risks any time you deposit a check to your account.
Some of the risks are negligible, but others are significant. People reported more than 27,000 fake check scams to the Federal Trade Commission in 2019. The losses resulting from those fake checks totaled more than $28 million.
Whenever you deposit a check you’re unsure of, be especially careful if it’s a large check. Check scams work in part because of common confusion about when checks clear.
If someone sends you a check as payment but you can’t keep the full amount of the check, this is likely a scam. They may instruct you to then send back money in some format, such as gift cards, a wire transfer, or goods you buy with the money they sent you.
If you don’t realize the check was fake before sending them funds, you'll lose the money you sent. You also could be subject to fines or fees if you cannot prove you were a victim, rather than part of the scam.
Alternatives to Checks
If you’re worried about bouncing checks, request payment in different forms. Wire transfers are viable alternatives. The money only transfers if it exists and typically appears within a few days.
You can also request a money order or use money transfer apps like PayPal or Venmo allow you to receive funds from customers, acquaintances, family, and friends.
You'll still need to practice safety and familiarize yourself with payment dispute or claim processes, as scams can still occur. However, the electronic trail can make it easier to prove your claims of fraud should the need arise.