A bounced check, also known as a rubber check or a bad check, is one that is not payable because there are insufficient funds to cover it and it is returned to the bank of issue.
Issuing a bounced check entails the payment of penalties for the account holder who issued the check. The company or person to whom the check was issued may also demand a certain fee on top of this. In other cases, especially when it is established that the bad check was issued with the intent to commit fraud, it is possible to be slapped with criminal charges and even arrested for issuing bounced checks. However, this is not often the case, because banks normally inform the account holder as soon as possible once a check is shown to lack the necessary funds to cover it, and depositors usually make an effort to correct this immediately.
The issuance of bounced checks is a most often the result of overestimation of one’s available balance. However, since passing bad checks can be penalized, it is necessary to take certain precautions before issuing checks. It is possible to check one’s balance online in order to easily get an updated report one’s financial status. Making sure that funds are sufficient before the issuance of checks can help one avoid the hassle or possible criminal prosecution that issuing bounced checks can cause. Another way of avoiding the issuance of bounced checks is by balancing one’s checkbook.
Some banks may offer automatic overdraft protection. This means that in cases when there is an insufficient balance to cover the amount indicated on the issued check, the bank can cover the amount first and then charge the account holder an additional convenience fee. Such fees tend to be quite steep and may be easily avoided by taking extra care not to issue checks for which funding is uncertain.
