What happens if I cash a bad check?

A bad check – also known as a bounced check or NSF (non-sufficient funds) check – is a check which does not clear because the issuing bank account does not have enough funds to cover it. 

Cashing a bad check can mean paying fees and having a mark on your credit and bank history. Writing a bad check can potentially mean legal action and jail time.

Here’s what you need to know about bad checks and how to avoid them.

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What happens if I cash a bad check?

Most banks won’t allow you to cash a bad check. However, if you are able to cash a bad check then you will need to pay back the money with potential fees. Repeated or malicious offenders may lose their account or be subject to legal actions for check fraud.

Unfortunately, if you deposit or cash a bad check, you’ll often be the one paying for it. Your deposits are your responsibility, so you may be required to pay back the check’s total amount plus processing and overdraft fees for your bank, which can be incredibly costly.

In the worst-case scenario, you may lose access to your account. Some banks will freeze or, if you’re particularly unlucky, even close the account if a check bounces. If it happens multiple times, cashing a bad check might damage your credit and banking histories and label you unreliable.

Cashing a bad check multiple times may lead to facing criminal charges. Most states view check fraud as a misdemeanor up to a certain check amount and a felony beyond that. This means that you might be sentenced to pay a fee of $500 or more or spend months or even years in prison.

In all likelihood, though, if you cash a single bad check by accident, you’ll have to pay your bank back and attempt to get the money owed to you from the check-writing party.

What can I do if someone wrote me a bad check?

The best thing you can do if someone has written you a bad check is to recognize it before you try to deposit it. Some warning signs that you’ve received a bad check are:

• The check comes from a source you’re unfamiliar with
• You are overpaid for a service you provided and asked to return some of the funds from the check
• The bank listed on the check is foreign or unfamiliar to you
• You are “hired” to do the shopping for someone else and asked to buy gift cards with the money from the check
• You are told you have won a prize but must cover taxes or other fees with some of the winnings from the check

If you recognize any of these signs, do not deposit the check. Instead, request another form of payment, cancel the transaction, or, if appropriate, report the check writer to the authorities. If you’re in any doubt about a transaction, call the bank the check is drawing from (from an outside, official number) to confirm its legitimacy.

If you accidentally cash a bad check, pay back the fees that you can and seek immediate repayment from the writer. Contact their bank and resolve the issue if you can’t reach the writer or they refuse to repay you.

If that doesn’t work, you’ll want to formally demand payment via certified mail to both the writer and the issuing bank. From there, legal action may be necessary.

Can you sue someone for giving you a bad check?

In some states, the legal action necessary to garner repayment for a bad check. This can include suing in small claims court for up to three times the amount written in the check, plus court fees, with interest if the amount is paid over time.

You may have to go to a higher court to get the money back for larger checks or long delays in response time. Be aware that this means more legal fees for you, which may make the check not worth pursuing.

What happens if I accidentally write a bad check?

You may accidentally write a bad check if you give a check for an amount over the funds you have in your account. This can happen if your funds suddenly change between the writing of the check and its depositing or cashing, or if you haven’t reviewed your finances before writing the check.

If you accidentally write a bad check, contact the person it is addressed to immediately. Inform them of the situation and ask them not to deposit or cash it until you have assembled the necessary funds. This may be slightly embarrassing, but it’s better than having to pay the associated fees and take the history hit of a bad check.

You may also choose to add overdraft protection – insurance in the event of an overdraft up to a certain amount – to your account. This means that the check will go through, though you will still have a $0 balance in your account. Overdrafting, with or without protection, will usually incur a fee, so be prepared to pay that.

Overdraft protection functions as a sort of loan, which you’ll be expected to pay back. Most banks also limit the number of times you can use this protection, so it’s best to avoid having to use it at all. Be careful to review your finances regularly and write checks only when you’re confident you have the funds to back them up.

Summary: What happens if I cash a bad check?

If you cash a bad check by accident, you’ll likely face nothing more than some costly fees and embarrassment. However, if it happens multiple times, you may see severe costs for your financial health.

Protect yourself from check fraud by learning to recognize the signs of a bad check. Understand where you can go for legal help if you accidentally cash a bad check.

Remember that checks are a slower method of transferring money and that they may require up to a month to fully clear. Don’t spend money from checks immediately, if you can avoid it. 

Allowing the extra time for a check to clear or bounce can mean a huge difference in fees and financial headaches.

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