How to Deal With a Bounced Check

Know why your check bounced. It bounced because there wasn't enough money available in your account to cover the amount of the check you wrote. Sometimes a check bounces when you have made a mistake in your checkbook and you think you have more money than you actually do. At other times, you have put money into the account but it didn't clear yet. If you put money into your account late on Friday afternoon--after 2 p.m. usually--then that deposit may not post until Tuesday. It takes two days in many cases for a deposit to clear. So either you didn't have the money in the first place or you had it but it wasn't available to the merchant to take his payment out.

Know what happens when a check bounces. The merchant you wrote your check to then takes it to the bank. If there is not enough money to cover the check, the bank returns the check to the merchant, as it is up to him to collect the money due to him, not the bank. At this time, your bank will charge you a returned check fee which can be anywhere from $10 to $75 dollars. This will appear on your online or paper bank statement as a returned check fee.

Know the next step in the process. Most of the time a merchant just redeposits the check. If the check bounces again for lack of finances, the merchant will probably not run it through again. The merchant will most probably try to contact you through the information written on your check. The merchant can legally charge you a hefty fee for the bad check and interest at this point. The merchant actually could do this after the first time but in the interest of good customer relations, it is not common practice.

As soon as you become aware of the fact that your check bounced, you need to take action. Even if you have to borrow money, you don't want to leave this hanging. It can really damage your credit rating as well as become more costly with time. Call the merchant and tell him that you are very sorry that you made a mistake with your checking account and that you will take care of it today. That shows good faith and most merchants really want to keep things pleasant since they depend on customers to survive.

Go to the bank immediately and transfer money into your checking account from your savings if you can. If not, borrow the money, sell something or pawn something to secure extra funds. Go to the merchant first and pay what you owe. She may want a lot more money for fees and interest and, if you don't have it, tell her that you will pay them when you do. Make sure to tell her the day you will be there with the money because she can continue to charge you interest on the money you still owe--even if the original check has been taken care of. Talk to the merchant. If you are a regular customer, she may waive all the fees but don't count on it. It is her legal right to charge you for the inconvenience.

Clean up the mess as soon as possible. It will get worse with time. After this, see if your bank will provide you with overdraft protection which is similar to a loan. Another thing you can ask them to do is to tie your savings account to your checking so that the amount needed will go the merchant from your savings if your checking account is short. Many banks charge a fee for this service or for each check they switch funds around to cover. Make sure you know all about it before you agree to anything. Next, keep up with your check book online. It's the easiest and most accurate way to keep a handle on your money.