While bouncing a check doesn’t directly affect consumers’ credit scores, it can be a hassle and cost additional fees. Thanks to mobile banking technology, it is easier for consumers to keep track of their checking account, so bouncing checks has become less of a problem. However, that’s not to say that it doesn’t happen. Consumers can be in a hurry and write a check only to find out they’ve been slapped with an overdraw fee, not to mention having to pay the bank back for the check that the bank covered. Consumers need to be aware of how much money they have in their checking accounts so bounced checks or overdraft penalties don’t arise.
Refer to the following on how to avoid bouncing a check:
Keep track of your checks:
Just because a consumer’s account balance can be viewed quickly online or through a banking app, it is important to always be aware of checks that are written. Unlike using a debit card, hand-written checks don’t have to be deposited into a bank account right away. According to Credit.com, this is where consumers can get into trouble, because they forget about a check they wrote1 last week. Just because a consumer writes a check doesn’t mean it has come out of their account yet.
Additionally, some ATMs, especially those outside of a consumer’s banking network, have fees associated with them when making a withdrawal. If a consumer continuously uses ATMs unaffiliated with his or her bank, they might not realize how many fees have been built up. This will lead to a smaller amount of money in a checking account, and when writing a check, this can pose a problem for the consumer.
Remember automatic payments:
Another advantage of mobile banking means consumers can set up automatic payments so they don’t miss bill payments. While this is a great feature and can help a consumer stay on top of payments, the Federal Reserve Board noted it is easy to forget these payments coming. If a consumer forgets that an automatic payment is being taken out of his or her account, he or she might write a check without realizing they’re going over the account limit. Consumers need to remember when automatic payments are being taken out so they can plan accordingly for writing checks.
Make use of overdraft protection:
Different banks will handle overdraft protection differently, but it is worth having it, according to Bankrate. Overdraft protection allows an account to be overdrawn, as the bank will front the difference. The consumer is not off the hook however, as he or she must repay the difference within a certain amount of time. Banks will send the consumer a notification, either by text or phone call, letting the consumer know how much has been overdrawn and how much time the person has to get the money back into the account. This is a handy feature that consumers should take advantage of.
Have an established limit:
Banks allow consumers to set a limit on their checking accounts, which means consumers will be notified when they go over that limit. For instance, if a consumer sets $100 notification limit on an account, then he or she will be notified when the account reaches that point. This is important because it allows the consumer a cushion to prevent them from overdrafting. Similarly, if consumers receive an alert that tells them they only have so much left in their account, they are less likely to spend anything until more money is put into the account. This helps them not only avoid an overdraft but also save. Metro Credit Union recommended setting a limit so this cushion is always in the account. Additionally, the money can still be used, but the consumer is at least aware of how much is in the account.
There are many ways to keep an eye on a checking account. Consumers can take advantage of many tools and features that mobile banking offers, but what is most important is to be aware of spending. As long as a consumer is conscious of spending habits and how much money is in his or her checking account then avoiding bouncing checks will not be a problem. Even so, setting up reminders, such as account limits, is still a good idea. For more information on bouncing checks or maintaining a checking account balance, visit Cash Central’s Resource Center.
The views expressed by the articles and sites linked in this post do not necessarily reflect the opinions and policies of Cash Central or Community Choice Financial®.
1Lazarony, Lucy. (2016, Nov 22). Retrieved from: https://www.credit.com/blog/ways-to-avoid-overdraft-and-bounced-check-fees/