The Avalanche A bad check can cost you a $1500 fine in some states and bad checks are illegal in every state. So before your write a bad check, why take a gamble if you are not certain whether or not there are sufficient funds? We consumers consistently complain about bank errors, fees, interest rates and more. Credible reports indicate banks earn multi billions of dollars annually in bounced or bad check fees and most of this income is pure profit. But we as consumers have little right to complain because these same reports also indicate 450 million bad checks are written every year and each bad check costs the consumer $10-$30 per check. Logic suggests also that if one check bounces, it is likely that more will follow. At this stage a non-sufficient fund (NSF) bank fee avalanche begins with one check bouncing after the other. Each check is then returned to a very unhappy business owner whose trust you just might prefer to maintain. And if they redeposit your check without any action on your part, you get a second NSF fee.
Check Verification If a retailer runs your check through Check Verification and it does not go through, you have a major problem. Either you have previously written bad checks or you may be a victim of fraud. In either case, vendors will probably refuse your check until corrected. The retailer should tell you how to get the report used to reject your check. However, smaller store sales clerks may not know. If this is the case, insure you ask the manager for the proper information to correct this problem as soon as possible. Once you can clearly identify who you are and offer your checking account number, check verification agencies can tell you over the phone of negative entries in your file. They can also tell you how to correct them. Some of the check verification agencies and phone numbers are:
NPC: 800-526-5380 Check Kiting If you ever mailed a check the day before you got paid, or written a check praying it does not clear before Monday, you have broken the law. The vernacular for such activity is “Check Kiting”. The Office of the Comptroller of the Currency (OCC) says check kiting can be prosecuted since it is the “ability to gain access to deposited funds before they are collected from the institution on which they are drawn”. The process of depositing a check in one bank account into a second bank account without the sufficient funds to cover it is a common theme. Prosecution is normally not pursued, unless criminal intent is detected. However since prosecution could occur, it may be wise to know your bank’s check holding policy. Check Holding Policies Do you know what your bank’s check holding policy is? If not you may want to find out because all banks and all checks are not equal. Each bank has specific amounts of time for holding different types of checks before the funds can be accessed. Two to five days is common. But whatever it is, you should find out. But you will have to ask as banks since banks are under no obligation to remind you. Bankrate.com Bankrate.com offers these helpful ideas:
Use direct deposit for paychecks.
Take advantage of linked accounts and transfer money to cover your needs until deposited checks can be accessed.
Consider overdraft protection through a savings account or a line of credit to get you through holding periods. But be careful of costs for this service, particularly with a line of credit.
If you need fast access to money coming from out of state, and are willing to pay extra, consider a wire transfer to your account or Western Union delivery.
Ask your bank about sending the check out for collection to speed up the clearing process. This requires special handling, though, so expect a fee.
If you are a good customer, banks are sometimes willing to bend a little, so kindly ask the branch manager to shorten the hold. As a final thought, I always carry an additional $100 in my checking account that is not reflected in my balance. That way even if I am at zero, I really have $100.