Are there negative effects of a cheque?
What is a cheque?
A cheque is a signed, written order given to the bank to pay money to the receivers out of the payee’s account.
Why are cheques prone to fraud?
If you are using a cheque, it is handled at the least by 20 people between the time it is submitted to the time it is presented to the bank for payment. It means that a scammer has many occasions to intercept the cheque. Sophisticated and professional criminals will alter the cheque to perfection that isn’t visible to the naked eye.
Expert recommendation: Research shows that electronic payments are safer than cheques. Most banks feature accounts to pay through ATMs, the internet, or a “bank-by-phone” system. The services are an asset for the regular accounts and are frequently used for electricity, telephone, rent payments, rates and taxes, and many more opportunities. These also save human efforts and time. To know more about your electronic account payments, you can call your bank’s customer services.
What Is a Bounced Cheque?
A bounced cheque is a short form for a cheque that will not be processed because the account holder has insufficient funds (NSF). There are many terms for failed cheques, such as banks returns, bounced cheques, and rubber cheques. Rather than discarding them, the banks charge additional NSF fees.
Passing on a bad cheque or bad cheque can be illegal, and the crime can range from a violation to a felony, depending upon the amount and if the activity involves crossing state lines.
Points to Remember
- A bounced cheque occurs when the bank account/ cheque owner doesn’t have sufficient funds available to go ahead with the payment amount written on the cheque to the payee.
- When a cheque bounces, the payee doesn’t get away from the bank, which may result in fines and banking restrictions.
- Additional penalties for bouncing cheques include negative credit score marks, merchants start refusing cheques in turn not accepting, and potentially legal cases.
- Some banks help their customers by offering overdraft protection to prevent cheque bouncing.