What can you do if a cheque bounces?
Published 30 November 2016
Make sure the money gets to where it needs to go.
Paying by cheque isn’t as popular anymore. After all, if you’re paying someone in person, it’s usually easier just to give them cash or pay using your debit card. And if you’re paying for something online, you’re more likely just to transfer the money into their account.
But some people prefer you to pay them with a cheque – if you’re putting down a deposit for a rented flat, for example. If you’re doing this and your cheque bounces, what does this mean? Let’s take a look at what you need to do.
What is a bounced cheque?
When you’re paying by cheque, you’re telling your bank, building society or alternative account provider to transfer this money to them. But it can only do this if there’s enough money in your account or your overdraft can cover it.
If there’s not enough money, the cheque will ‘bounce’. This means your bank won’t pay out the money. Instead, it might fine you and this could be as much as £25, depending on your bank’s policy. This is similar to what happens when you have a returned Direct Debit.
Most banks will retry to pay the cheque later the same day. If your bank does this and they tell you that the first payment bounced, this is a chance to put some extra money in your account if you can afford to do so. So if you’ve got any cash in another account, you can use this to top up your regular account to avoid any charges.
You’ll have until the ‘cut-off time’ to put money into your account – this is usually 2pm but check with your bank to be sure.
How to avoid bounced cheques
The best way to deal with bounced cheques or other payments is to avoid them in the first place. Here’s how you can stay away from unpaid bills fees.
• Check your upcoming Direct Debits and standing orders when you’re due to pay a cheque. Just because you’ve got the money now doesn’t mean you’ll have it in a couple of days when the cheque goes out.
• If any Direct Debits will mean you won’t have enough to cover the cheque, see if you can reschedule any.
• Keep an eye on your online banking when you’ve paid the cheque. Your bank doesn’t have to tell you the payment has bounced so it’s best to check yourself.
• Your bank should let you put money into your account as an electronic Faster Payment. This means you should be able to top your account off before the cut-off time.
An account for budgeting
If you’re a thinkmoney Current Account customer, you can keep track of your money and avoid bounced payments or returned Direct Debits. When you get your wages or any other money, we’ll ring-fence whatever you need to cover any bills you’ve told us about. This means you can be sure that the important things are always covered.
You can then spend the leftover money without worrying you’re accidentally using up cash needed for something important. The thinkmoney Current Account has a monthly management fee of £10 or £15 for a joint account – you can find out more about how it works here.