Bounced Check: Definition, What Happens Next, Fees & Penalties

What Is a Bounced Check?

A bounced check is slang for a check that can't be processed because the account holder has non-sufficient funds (NSF) available for payment. Banks return, or “bounce,” these checks, also known as rubber checks, rather than honor them, and banks charge the check writers NSF fees.

Passing bad checks can be illegal, and the crime can range from a misdemeanor to a felony, depending on the amount of the check and whether the activity involved crossing state lines.

Understanding a Bounced Check

Many times, bad checks are written inadvertently by people who simply are unaware that their bank balances are too low. To avoid bouncing checks, some consumers use overdraft protection or attach a line of credit to their checking accounts.

A bounced check may result in overdraft fees, restrictions on writing additional checks, and negative impacts to your credit score. Writing too many bounced checks may also prevent you from being allowed to pay merchants by check in the future. Many merchants use a verification system called TeleCheck to help them determine if a customer’s check is good. If this system connects the check you’ve just presented for payment to a history of unpaid checks, the merchant will decline your check and ask you for a different form of payment.

Are There Fees for Bounced Checks?

When there are insufficient funds in an account, and a bank decides to bounce a check, it charges the account holder an NSF fee. If the bank accepts the check, but it makes the account negative, the bank charges an overdraft fee. If the account stays negative, the bank may charge an extended overdraft fee.

Different banks charge different fees for bounced checks and overdrafts, but as of 2023, the latest data available, the average overdraft fee was $26.61. Banks usually assess this fee on drafts for checks as well as electronic payments and some debit card transactions.

What Happens When a Check Bounces?

Bank fees are just one part of bouncing a check. In many cases, the payee also assesses a charge. For example, if someone writes a check to the grocery store and the check bounces, the grocery store may reserve the right to redeposit the check, along with requiring the check writer to pay them a bounced-check fee.

In other cases, if a check bounces, the person or company being paid reports the issue to debit bureaus such as ChexSystems, which collects financial data on savings and checking accounts. Negative reports with organizations like ChexSystems can make it hard for consumers to open checking and savings accounts in the future.

How To Avoid Bounced Checks

Consumers can reduce the number of bounced checks they write by tracking their bank balances more carefully, by using an ironclad system of recording every single debit and deposit on a check register as soon as it occurs, or by keeping close tabs on their checking account by using online banking.

Consumers also can fund a savings account and link it to their checking account to cover overdrafts. Alternatively, consumers may opt to write fewer checks or use cash, debit cards, and immediate online payments such as mobile wallets, PayPal, or the like for discretionary spending.

The Bottom Line

From costly fees to hampering your ability to open new checking and savings accounts, bounced checks can have serious consequences. Fortunately, through preparation and diligence, they can be avoided. If you’re concerned about accidentally writing a bad check, consider signing up for overdraft protection through your bank and/or linking a savings account to your checking account.