Bounced checks are a serious problem that can drain money from your account. Bounced checks occur when there is not enough money in your checking account to cover the amount of checks you have written. If you write a check for $51, for example, and you only have $49 in your account, your check will bounce. That is, your check will be returned to you and the person you have written the check to (let’s say a utility company) will not be able to get their money. Usually, both the bank and the business (in this case, the utility company) will contact you about the bounced check. The utility company will generally charge you hefty fees for the bad check and your bill will be unpaid, which can affect your credit score and can lead to late fees. In addition, your bank will usually charge you extra fees due to the bounced check.
It pays to avoid bounced checks at all costs. The easiest ways to avoid bad checks is to keep careful track of how much you have in your account and how much you have coming out in automatic withdrawals and checks. Keeping track ensures you always have enough in your account to cover expenses. You can also borrow money in an emergency in order to cover a check. Many banks offer overdraft protection. This protection ensures that even if you write a check for more than is in your account, the bank will cover you (as a type of loan) so that you do not get a bounced check charge.