Jun/090
What Happens When You Write a Check With No Money to Cover it?
It used to be that if you wrote a check and there wasn’t enough money to cover it, the bank would just fail to pay it, and it would bounce. Then, the person who held the check would either charge you a fee for a bounce check and try to collect the original debt too, or they would try to submit it to the bank another day, in the hopes there would be enough funds to cover it the next time. Now, things are a little more complicated.
You can get fees from your bank too, which is the major reason people opt for money today loans from a payday lender rather than risk bank fees. So, now, you can have a few things happen, when you write a check with no money in the bank.
If you have overdraft protection, the bank will simply move money from your overdraft protection and pay the check and then bill you later as a line of credit with a high interest rate. They will also charge you an overdraft fee anyways. But, at least you won’t suffer another fee from the vendor you wrote the check to, because it will simply be paid.
If you have no overdraft, your bank may refuse to pay the check and charge you an insufficient funds fee. The person to whom you wrote the check will most likely charge you a bounced check fee too. And, you will have to pay the original balance owed in cash or a money order.