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Postdated Checks: Writing and Cashing
This check-writing trick will not work as anticipated. If you obtain or plan to write a postdated check, it’s critical to understand how they work—it might not be the way you expect.
A check with a future date is known as a postdated check. As an example, suppose it is January 1 and you are writing a check. In general, you’d write the current date on the check, which is January 1. However, you might just as easily postdate it a week and make the check payable on January 8.
The Fundamentals of Postdated Checks
People usually postdate checks when they want the receiver (also known as the payee) to wait before depositing the check. This may be explained in one of two ways:
- When the check is written, the check writer does not have ample funds available, but those funds will become available at a later date.
- The check writer is making advance payment for something—before the payment is due or the service is done.
Checks that have been postdated and the law
When writing a future date on a check, the following cautions apply:
No fraud is permitted: There is no statute prohibiting the use of postdated checks. However, it is unethical to write a check knowing that you lack the funds necessary to cover it.
However, defrauding anyone who sells you something by offering to pay but actually planning to do so is still illegal.
Not a formal contract: Simply because something is legal does not guarantee that it will turn out the way you wanted. The date you want is not a contractual obligation between you and the payee. In most cases, the recipient of the check will deposit it at any time.
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Unless you have properly set up your banking relationship, the bank is free to pay funds out of your account before the date specified on your check.
Consult your bank: Including a future date on the check makes no guarantee. Typically, you’ll need to have written notes, which your bank will assist you with.
Banks have varying policies on the length of time they will continue to track for premature payment. Expect to pay at least $35 for this service.
Cashing a Postdated Check Before the Expiration Date
In most instances, a postdated check may be deposited or cashed at any time. Although debt collectors can be forbidden from processing checks before the check’s expiration date, the majority of individuals are free to deposit postdated checks immediately.
Having said that, if you agreed to wait, cashing the check prematurely could constitute a breach of an oral agreement and could be illegal in some jurisdictions.
It’s prudent to contact the person who wrote the check first—almost there’s certainly a reason it’s postdated. If there are insufficient funds in the account, the check may bounce, and you may be required to pay insufficient funds or overdraft fees to your bank.
You may seek reimbursement from the check writer, but collecting from someone who is already short of funds can be time-consuming and costly and require legal action. Determine if the check was purposefully postdated and devise a solution.
Banks (at least in the United States) usually pay postdated checks unless the checking account owner expressly instructs them not to.
The majority of people do not do so, in part due to the extra costs associated with monitoring the account and preventing payment before the specified date.
Cashing a postdated check can be difficult. Due to the risk that the check may not clear, you might have better luck depositing such checks. This enables the bank to put a hold on the funds rather than simply handing them over in cash.
If you really wish to cash a postdated check in its entirety, take it to the bank that issued the check, which is usually the bank where the check writer has a checking account.
Who Is Responsible If There Is a Problem?
In certain instances, postdated checks are deposited without anyone noticing (because they do not look closely at the date). Unless there is an issue or complaint, those tests are processed and discarded.
However, a declined payment (or an unauthorized withdrawal from your checking account) will result in a slew of complications.
If you give your bank instructions and they pay funds from your account, your bank should be expected to cover any resulting overdraft charges, and you will have further leverage against your bank for other expenses.
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Substitutes for Postdating Checks
If possible, stop writing postdated checks. The only way to ensure they operate is to pay additional fees to your bank. If you are unable or unable to pay the bank for account monitoring, you are at the mercy of whomever you write the check to.
Even if your payee is truthful, they can make the truthful error of forgetting (and leaving you with bad check fees).
Typically, postdated checks are used when funds are limited—exactly when extra fees are not an option. Rather than issuing a postdated check, consider the following:
If you’re rescheduling a check for timing or convenience purposes (say, you’ll be out of town and unable to pay when you normally would), do it via your bank’s online bill payment service.
If you need a few more days for funds to clear in your account, request an alternative payment date from your payee.
Certain billers are willing to work with you to negotiate a payment date that suits your cash flow (they’ll set your due date a few days after your direct deposit usually arrives).
Enrol in automated electronic payments—but only if you have confidence in the payee. Businesses that are dishonest or disorganized can make withdrawals from your account before you are ready.
How To Post Date A Check – Life Lessons #2
- Bad Checks State of California Department of Justice.
- Does Postdating a Check Prevent Anyone From Depositing It Early? Consumer Reports.
- Can a bank or credit union cash a post-dated check before the date on the check? Consumer Financial Protection Bureau.
- My bank/credit union cashed a post-dated check even though I told them about the post-dated check before they received it. What can I do? Consumer Financial Protection Bureau.
- Understanding Bank of America Interest Checking Bank of America.