Writing and Cashing Postdated Checks
This check-writing hack may not work the way you expect it will
A postdated check suggests control. Whether you receive a postdated check or are thinking of writing one, it’s important to know how they work—it may not be the way you expect.
Basics of a Postdated Check
A postdated check is a check with a future date written on it. For example, assume that today is Jan. 1 and you’re writing a check. In general, you’d put the current date of January on the check. But you could just as easily postdate it a week and write Jan. 8 on the check.
People usually postdate checks when they want the recipient (the person or business receiving the payment, also known as the payee) to wait before depositing the check. Two potential reasons for this include:
- The check writer does not have sufficient funds available when writing the check, but those funds will be available on the future date.
- The check writer is paying for something ahead of time—before the payment is due or the service has been completed.
Postdated Checks and the Law
These caveats apply when writing a future date on a check:
- No fraud allowed: There’s no law making postdated checks illegal. However, it is illegal to write a check when you know you don’t have the funds to cover it. Some states—New Jersey, for instance—are lenient if the check writer says the bad check was an honest mistake. However, It is always illegal to defraud somebody who sells you something by pretending to pay but never intending to do so.
- Not a written agreement: Just because it's legal doesn't mean things will work out the way you intended. The date you choose to use is not part of a legally binding agreement between you and the payee. In most cases, the recipient can deposit the check at any time. Unless you set things up correctly with your bank, the bank is free to pay funds out of your account before the date shown on your check.
- Ask first: A postdated check might not be an acceptable form of payment. You’re allowed to try to pay with a postdated check, and businesses are allowed to reject those payments because you haven’t really made a free-and-clear payment. If you plan to write a postdated check, ask for permission before doing so. If your payment is rejected, you might be unable to buy a product or service you wanted, could incur late-payment fees, and may face other consequences. For example, the Internal Revenue Service generally doesn’t accept postdated checks. Writing one that bounces could trigger penalties and interest charges. Likewise, some universities won’t accept postdated checks. If you write one, complications with enrollment (among other things) are a possibility.
- Confirm with your bank: Writing a future date on the check guarantees nothing. Typically, you’ll have to provide written instructions, and your bank can tell you exactly how to do that. Banks have different policies for how long they will continue to monitor to prevent premature payment. Expect to pay at least a $35 fee.
Cashing a Postdated Check Before the Date Shown
In most cases, you can deposit or cash a postdated check at any time. Debt collectors may be prohibited from processing a check before the date on the check, but most individuals are free to take postdated checks to the bank immediately. That said, if you agreed to wait, cashing the check prematurely might be considered in violation of an oral agreement and illegal in some jurisdictions.
It’s wise to communicate first with whoever wrote the check—there’s probably a reason it’s postdated. If the account does not have sufficient funds, the check might bounce, and you might have to pay insufficient funds or overdraft fees to your bank. You can try to get those fees reimbursed by the check writer, but collecting from somebody who’s already low on funds can be time-consuming and expensive (possibly requiring you to take legal action). Find out if the check was intentionally postdated, and figure out a solution.
Banks (in the U.S. at least) typically pay on postdated checks unless the checking account owner specifically instructed them not to beforehand. Most people don’t do this, in part because of the additional fees to monitor the account and prevent payment before the specified date.
Cashing a postdated check might be a challenge. Because there’s a possibility it won’t clear, you might have better luck depositing those checks. That allows your bank to place a hold on the funds instead of handing over cash immediately. If you really want to cash a postdated check for the full amount, take it to the bank that issued the check which is where the check writer has a checking account.
Who Pays if There's a Problem?
In some cases, postdated checks get deposited, and nobody ever notices (they don’t look closely at the date). Unless there’s a problem or complaint, those checks are processed and forgotten about.
However, a rejected payment (or an unexpected withdrawal from your checking account) can cause numerous problems. If you provide instructions to your bank and they pay funds from your account, your bank should be required to cover any overdraft charges that result, and you may have further recourse against your bank for other expenses you face.
Alternatives to Postdating Checks
If you have the option, it is best to avoid writing postdated checks. The only way to guarantee they’ll actually work is to pay extra fees to your bank. If you’re unwilling or unable to pay your bank to monitor your account, you’re at the mercy of whoever you give the check to. Even if your payee is honest, they may make the honest mistake of forgetting (and leaving you with bad check fees).
Usually, postdated checks are used because you’re short on money—and that’s exactly when you can’t afford extra fees. Instead of writing a postdated check, try the following:
- If you’re postdating a check for timing or convenience reasons (say you’ll be out of town and unable to pay when you usually do), schedule the payment through your bank’s online bill payment service.
- If you need a few extra days for funds to clear in your account, ask your payee for an alternate payment date. Some billers are happy to arrange a payment date that works well with your cash flow (they’ll make your due date a few days after your direct deposit typically comes in).
- Sign up for automatic electronic payments—but only if you trust the payee. Dishonest or disorganized businesses may make withdrawals from your account before you’re ready.