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What happens to my check if I write a check for more money than I have in my account?
It’s really important to know the answer to this question because writing a check for money you don’t have in your checking account can cost you a lot of money. And if you do it too often, you can go to jail.
For most people, there are two possibilities if you write a check for money you don’t have in your account:
1) Your check will “bounce”—meaning the bank will not pay your check. When this happens:
The important message here is don’t write checks for more money than what is in your account. If you accidentally write a check for more money than you have, contact the person you wrote the check to and try to settle the mistake ASAP.
Since bouncing checks is illegal, if you write too many checks for money you don’t have in your account, you can be arrested. Talk about expensive—there are bail fees, attorney fees, court fees, fines for illegal behavior and you’ll still need to pay all those bounced check fees along with the money you owe to whoever you wrote the checks to in the first place.
2) The second option for covering the cost of a check when you don’t have enough money in your account is known as “overdraft protection.” If your checking account has “overdraft protection” the bank will “automatically” pay the check and treat it as a loan you must repay with interest. You’ll also be charged an overdraft fee which can range from a couple bucks to more than $20. Every time one of your checks is paid by “overdraft protection” you’ll be charged the overdraft fee (for example, $3) and the amount will be added to your loan balance. Interest on overdraft protection loans is similar to credit card rates—something like 18-20%. If you didn’t have the money to pay the checks you wrote, how will you repay the overdraft protection loan? Although this is a better option than having a check bounce, it will still cost you a lot of money. And, if your checks total more than the amount of your “overdraft protection,” your bank will probably start bouncing any additional checks written.
Check with your bank or credit union to see if you can add “overdraft protection” to your checking account. It will probably save you some money for an accidentally bounced check and will help maintain your reputation. And, even though it costs money, it is much cheaper than bounced checks.
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