What Causes a Check to Bounce and How to Prevent It From Happening

Bounced checks can be a huge issue for businesses of all sizes. A bounced check can cause numerous problems, including fees from the bank and negative marks on their credit report. In this post, we'll discuss what causes a check to bounce and how to prevent it from happening. 

What Causes a Check to Bounce?

One of the most common reasons for a check bouncing is when there aren't enough funds in the account to cover the check. Another reason could be that there was an error made when writing the check, such as forgetting to include the correct amount or including incorrect information like the wrong bank account number.

When you pay your utility company or other service providers online, it's important to make sure that the account you're drawing from has enough funds to cover the check. If there aren't enough funds in the account, the payment will bounce and you'll likely be charged a fee by your bank.

Bank Account Is Frozen or Closed

When a bank account is closed or frozen, it means that the bank will no longer allow any transactions to take place on that account. This includes deposits and withdrawals, as well as checks written against the account. If you attempt to write a check against a closed or frozen account, your check will likely bounce. If you have recently closed your account but still have checks outstanding, you should inform the payee that they may not be able to cash those checks.

Incorrect Routing Number

If you include the wrong routing number on a check, your bank may not be able to process it correctly. Make sure that you double-check the routing number before writing out your checks. If you are in Philadelphia and have trouble cashing your check, there are Philadelphia check cashing companies that will help you get money for your business.

The Signature On the Check Is Not Valid

If the signature on a check does not match the signature on file at the bank, the check may be rejected. This can happen if you've recently changed your name or if you've given someone else permission to write checks on your behalf. Be sure to keep your signature up-to-date at the bank so that this doesn't become an issue.

How to Prevent a Check From Bouncing

To prevent a check from bouncing, remember to always include the correct amount and information on the check, and make sure that you're drawing from an account with enough funds to cover the check. You can also try to schedule your payments in advance so that there's always enough money in your account to cover them.

1. Budget and Plan Ahead

You can use a budgeting app to help you keep track of your expenses and income, as well as how much money is left in the account each month after all bills have been paid. You may also want to consider setting up automatic payments for some or all of your bills so that they're paid on time every month without any action on your part.

2. Utilize Helpful Tools

There are a few different tools and services that can help you stay on top of your finances and prevent bounced checks. For example, many banks offer online banking services that allow you to view your account balance and transactions at any time. 

Utilizing apps and software can help you stay on top of your finances and prevent bounced checks by helping to keep track of where your money goes so that there are always enough funds available when it's time to pay a bill or make a purchase.

3. Get an Overdraft Line of Credit

If you're in a situation where there's not enough money left over to cover your bills, getting an overdraft line of credit can prevent bounced checks. If your account balance drops below zero dollars for any reason, then the bank will transfer funds from this line into the account until it reaches zero again, which helps prevent overdraft fees from being charged. 

It's important to remember that there is usually a fee associated with using this service. Make sure you understand the terms and conditions of any overdraft protection before signing up for them.

4. Use a Debit Card

The best way to avoid bounced checks is not to write any at all. If you're worried about having enough funds in the account when it's time to pay a bill or make a purchase, then consider using your debit card instead of writing out a check. 

Debit cards are linked directly with your checking account, so as soon as the card is swiped and the funds are transferred, there is no chance for an overdraft or bounced check. Debit cards also allow you to keep better track of your spending because they show up immediately on your bank statement, unlike checks which can take several days before showing up in the mail or being processed at the store where it was cashed.

5. Communicate with Payees

If you know in advance that you won't be able to cover a payment, then let the payee know as soon as possible. Let them know this before cashing the check so they'll understand what's going on and can work with you to find a solution. For example, if you're going on vacation and won't have access to any funds for two weeks but still need some cash during this time frame, then tell them about it before leaving so they'll understand why your account isn't working out as planned.

It's important that the payee knows when there will be funds available again so they don't get worried about getting paid. In addition, if something happens to cause an overdraft fee or bounced check then this information could help them decide how they want to handle it whether or not they want to charge you additional charges.

Bounced checks are costly for both parties involved. By following these tips, you'll be able to avoid them and save yourself some money in the process. This way, you'll have less stress when it comes time to pay your bills each month because they're already taken care of.