Writing a paper check to make a payment is safer than carrying around lots of cash. But if a check bounces, it can be expensive and awkward, especially if you know the payee.

Here is a detailed look at why checks bounce and how you can avoid making that mistake.

What is a bounced check?

A bounced check is a check for which there are not enough funds in the bank customer’s account to cover it. The bank declines to honor the check and “bounces” it back to the account holder, who is typically charged a penalty fee for nonsufficient funds (NSF).

A bounced check is sometimes called a “rubber check.” There are other factors that cause checks to bounce, but lack of funds is the most common one.

When a check bounces, the payee doesn’t receive the intended funds, resulting in financial consequences for the check-writer.

What happens if you write a check without enough funds in your account?

Several things can happen when a bank account holder bounces a check. Here are a few of the consequences.

Bank penalty fees

Your bank likely will charge you an NSF fee for bouncing a check. The average NSF fee, according to Bankrate’s 2022 checking account and ATM fee study, is $26.58.

If the bank pays the check, even though you don’t have enough money in your account to cover it, it might charge you an overdraft fee. The average overdraft fee is $29.80, Bankrate’s study shows.

Bounced checks and penalty fees can snowball quickly and put an account holder in a financial hole, so it’s important to get your finances under control as quickly as possible.

Outstanding bills

When a check bounces, the payee does not receive the promised funds. Let’s say you write a check for your monthly rent payment. If there isn’t enough money in your account to back the check, the landlord doesn’t receive the rent payment.

Besides the bank penalties you incur, you will have an outstanding debt to your landlord until you can pay the rent.

Other penalty fees

Besides NSF or overdraft fees charged by your bank, the payee might penalize you, too. The landlord who got the rubber check for your monthly rent could charge you a penalty.

If you are late with a payment, such as to a utility or lender, because the check bounced, you will likely be charged a penalty, especially if it’s not your first time. Companies, such as credit card companies, often forgive penalties for established customers with excellent payment histories.

Damaged banking record

ChexSystems is a consumer reporting agency that helps banks and other financial institutions assess a potential customer’s reliability.

ChexSystems keeps a record of your banking behavior. If you have a history of bounced checks, unpaid fees and forced account closures, your ChexSystems report will reflect that.

Banks look at the ChexSystems reports of their account applicants. If your report is blemished, a bank may deny your application. Consumers in this situation may have to apply for a second-chance checking account until they can qualify for a traditional account.

Closed bank accounts

If you bounce enough checks, your bank could freeze or close your account. Talk with a bank representative if you are having trouble managing your account.

The bank may be more willing to work with you if it sees that you earnestly want to fix the problem.

What happens if I deposit a check and it bounces?

If someone writes you a check that bounces after you deposit it, your bank can reverse the deposit and charge you an NSF fee or “returned item” fee.

If you want to retrieve the money from the writer of the check, it’s up to you to take care of it.

Note of caution: The federal government warns consumers that checks can be tools criminals use to defraud account holders. The best practice is to never deposit or accept a check from someone or an entity you do not know.

Knowingly depositing bad checks into your account puts you at risk of fraud charges.

Why do checks bounce?

There are several causes of bounced checks.

Insufficient funds

“The most common reason for a check to bounce is when there are insufficient funds to cover the check amount,” says Salvador Gonzalez, a faculty member at Walden University.

If you write a check for $1,500, but you have only $1,000 in the bank, it will bounce when the payee tries to cash it because you don’t have enough funds to cover the amount written on the check.

You will probably pay a penalty fee to your bank for writing a rubber check.

Stale date

A check can bounce because “the check is considered ‘stale’ or ‘stale-dated,’ which refers to the check not being cashed within typically six months,” explains Jacob Dayan, chief revenue officer of NextPoint Financial.

Banks are not required to cash checks that are more than six months old. If you write a check and the payee puts it in a drawer and forgets about it until seven months later, you may have to write the payee a new check.

Ask your bank about its procedures for handling stale checks. If it believes the check will clear, it can go ahead and process it, but it’s not required to after six months.

Check not filled out correctly

If a check has incorrect or missing information, it could bounce. A few details to double-check before handing a payee a check include:

  • The date on the check is correct. It’s important to know that banks are allowed to process post-dated checks before the date on the check, so be sure you have sufficient funds in the account when you write the check.
  • The numbers and words for the check amount match. The check amount is written on the check twice, in numbers and words.  Be sure the two amounts match.
  • The check is signed in the right place by an authorized signer on the account.

Knowing how to properly fill out a check helps you avoid errors that can cause a check to bounce.

How to avoid writing a bad check

A bounced check is an expensive error. Not only can your bank penalize you, the payee might do the same. There are a few ways to keep checks from bouncing and avoid NSF fees.

  • Add overdraft protection to your account. This is an optional service that many banks offer their checking account customers. With overdraft protection, the bank covers a check if you don’t have enough money in your account. Banks charge a fee for this feature and there are usually limits on check amounts.
  • Add a linked account. By linking your checking account to a savings account or other source of funds, money can be transferred from that account to your checking to cover a transaction and keep your balance from going into the red.
  • Set up account alerts. Use your bank’s mobile app to receive instant notifications of a low balance and other account activity.
  • Monitor the account closely. Check your balance often, make sure checks clear and automatic deposits show up.

— Sarah Sharkey wrote a previous version of this story.