Cheque clearing/bounce

unlucky204

Hello,

I was hoping for a bit of advice regarding cheques. I have hardly ever had to write cheques before so I do not know too much about them and the clearing process.

Basically, I have a cheque to put in next week but will not have the funds to cover it the day I deposit it. By the time the cheque clears I should have the funds but I'm not sure what the bank do, do they look at the day it was deposited and if not enough cash bounce it, or is it only on the day it clears that it matters? I need to know if I have to deposit money to cover it on the day it will be deposited. I do not get paid until a few days later and should have enough money to cover the cheque then but I am really worried about it bouncing before I get paid.

Also if the cheque bounces what is the worst that will happen-will the bank pay it and just fine me? Will the person I'm paying know the cheque has bounced? Thanks in advance.

[Deleted User]

The time it takes for a cheque to clear varies from bank to bank, but the process is the same. Here's a link from the NatWest website which explains the cheque clearing cycle:

https://supportcentre.natwest.com/app/answers/detail/a_id/4038/~/an-example-of-a-cheque-clearing-cycle

Will the person being paid know if the cheque bounces? Yes, because they won't receive the funds and their bank will tell them somehow. You are correct that there may also be a financial penalty your end if this happens.

How can you get around this issue?

1. Depending on who the recipient is, the best option may just to explain the situation, can you ask them not to deposit the cheque until a certain date (or you could post-date it);
2. Remember, if you are sending the cheque by post, it will take a couple of days to arrive anyway;
3. If sending by post, you could also 'forget' to sign it, so it should be returned to you and lessens the chance of embarrassment;

I believe that 'Honesty is always the best policy' so would choose option 1. I'm sure the recipient would rather wait a few days longer and receive the funds rather than be further delayed because of a bounced cheque.

unlucky204

Thanks for the reply and link, very helpful.

Some great options there but I really do have to put the cheque in next week on a certain day. All I need to know is-do the bank bounce a cheque if the funds arent there on the day of deposit or do they bounce the cheque on the day the cheque is meant to clear? Like I said before, I will have the money by the time the cheque clears but not on the day of deposit. So I'm unsure what the bank do if I don't have the money in my account on the first day but do by end of clearing? If that makes sense! I am really worrying about this. Thank you.

bigadaj

unlucky204 wrote: »

Thanks for the reply and link, very helpful.

Some great options there but I really do have to put the cheque in next week on a certain day. All I need to know is-do the bank bounce a cheque if the funds arent there on the day of deposit or do they bounce the cheque on the day the cheque is meant to clear? Like I said before, I will have the money by the time the cheque clears but not on the day of deposit. So I'm unsure what the bank do if I don't have the money in my account on the first day but do by end of clearing? If that makes sense! I am really worrying about this. Thank you.

Could be either so it's up to you.

mgdavid

Technically, issuing a cheque when you know you don't have the funds to cover it is an offence (don't ask me which), but people used to do it all the time.
I don't understand when you say you need to 'put it in' on a certain day - it's up to the payee to pay the cheque in to their bank, who then process it and request the funds from your bank, which takes a day or more, as explained in the link. Here's another link you may find helpful.
https://www.citizensadvice.org.uk/debt-and-money/banking/cheques/

It would help you to get better information and guidance if you explained exactly what you are trying to do.

Ballard

If, for example, you don't have fund on Wednesday when the cheque is deposited but do on Thursday you won't have a problem. It might or might not be an issue if you have funds on the Friday, I just don't know.

I think that the answer to your question is that the bank won't check what your balance was on the day of the deposit. They will only check what it is on the day that they receive the cheque to debit your account.

If you don't have funds on that day then they could bounce it RD (refer to drawer). The cheque will then be sent to the payee and they will be debited the full amount plus a charge. An alternative is that it could go back RDPR (refer to drawer, please represent). In this case the payee will be debited as per RD but the cheque will automatically be re-deposited into their account and it will go through the cycle again. You will also be charged a fee whichever version would happen.

LE3

mgdavid wrote: »

Technically, issuing a cheque when you know you don't have the funds to cover it is an offence (don't ask me which)

The main problem isn't when you write the cheque, but when it is presented.
If you give me a cheque today, I may take it to the bank tomorrow or on Tuesday next week. The day after I take it to the bank it will be "presented" - that's the day when funds need to be available (for most banks it is by midnight on that day)

Most businesses will bank the cheques same day as they are received so you'd need the funds available by the end of the following day to guarantee that it wouldn't be rejected.

A returned cheque will go to the person who presented it (ie them not you) with one of 2 codes as mentioned above & will usually incur a fee of about £25 which you will be liable for

alanq

Postdating a cheque cannot be relied upon and is against some banks' Ts&Cs.

Depending on the sum involved, your perceived credit worthiness and your bank's Ts&Cs it is possible that instead of bouncing the cheque your bank may use its discretion to grant you an unarranged overdraft and charge you a fee and interest for that.

e.g. Nationwide Building Society
"If you do not have enough money in your account, or enough unused arranged overdraft, to cover the payments that are being made that day (such as Direct Debits, standing orders or cash or cheque withdrawals) we will decide whether or not to make the payment. Your payment instruction will be treated as a request for an unarranged overdraft."

~Beanie~

I dont understand what you are doing either. Are you paying someone by cheque, in which case they will pay it in? Or are you paying a bill over the counter of your own bank, using a cheque?

mgdavid

~Beanie~ wrote: »

....... Or are you paying a bill over the counter of your own bank, using a cheque?

Good grief, can you still do that?
How quaint!

unlucky204

Wow thanks for so many replies. Looks like I have to make sure the cash is available for when the cheque gets put in.

I didn't want to be too longwinded in my original post and go into it all but no it's not me who's putting the cheque in. I have already written a cheque and post dated it for someone else to put in. I have no idea when they will put it in but it could well be the day it is is dated for. I thought I may have the extra 5 days to get the money in before it clears but from the replies it seems like I have to have the money in on the first day.