A check tells your bank to pay the specified amount of money written on it to the individual or business whose name appears on the check. If you do not have at least the amount for which the check was written in your checking account, your bank can refuse to pay it. When that happens, your bank can impose fees for processing and returning the check, and most businesses charge returned check fees when payment is refused by a customer’s bank.

Most banks offer overdraft protection to their checking account customers. This might provide peace of mind, but it can also be expensive. Banks typically charge $20 to $30 for each check they pay when the protected account is overdrawn, and many banks charge a daily fee for each day your checking account remains with insufficient funds.

Having insufficient funds in your account is frustrating, but it can also get you in to some legal trouble, specifically in the form of check fraud charges.

How Do Bounced Checks Happen?

Even if you keep track of the checks you write, the amount of money actually in your account can drop below what you think believe the balance to be because of any one or a combination of the following:

• Writing a check without recording it in your check register
• Recording a deposit in your check register for more than the actual amount of the deposit
• Failing to make note of an ATM withdrawal
• Failing to record a purchase made with your debit card
• Forgetting about an automatic electronic payment withdrawn from the account

Managing Your Account

One way to avoid overdraft and bounced check charges is to maintain accurate records of all deposits, checks written, ATM withdrawals, debit card transactions and electronic payments. If your bank imposes monthly service fees on your account, make sure you subtract those fees from the account balance as soon as you become aware of them.

If you make a mistake and allow the balance of your account to drop below the amount needed to cover checks you have written, immediately deposit enough money into the account to restore it to what is needed to cover your checks. Include in the deposit enough money to pay the fees and expenses charged by your bank.

Contact anyone to whom you wrote a check who might be affected by the account being overdrawn and explain what happened. You might not avoid fees from the bank or the merchant, but you might be able to maintain a good business relationship with the person or company that received the check.

As mentioned previously, issuing a worthless check in Texas may result in criminal prosecution. Everyone makes mistakes, so writing an insufficient check does not automatically make one a criminal. In some cases, however, criminal charges may be filed for a bad check. To avoid the wrath of law enforcement and criminal prosecutors, you should make sure that you always have enough funds in your account.

Other Ways to Avoid Overdrafts and Bounced Checks

Most banks offer depositors the opportunity to link a savings account, credit card or a line of credit with your checking account. If you overdraw the checking account, the bank automatically transfers money from the backup source to pay the check. Compare the fees charged for linking your checking account to a backup source to the fees charged for overdraft protection.

Talk to Houston lawyer Rand Mintzer at 713-862-8880 to learn more ways to avoid unnecessary fraud charges.