Because I make most payments (like my mortgage) online, it’s not too often that I bust out the checkbook. A few weeks ago, however, I wrote a check and got a nasty surprise in my bank account. After the initial period of panic, grief and anger toward the bank and the person who had cashed the check, I did some serious digging into the regulations surrounding postdated checks. If you’re going to write a postdated check (or receive one), here are some things you should know!
What Does It Mean to Postdate a Check?
When you postdate a check, you put a future date on it. For instance, if you write a check on June 1 but date the check June 25, you are postdating the check.
Why Would You Postdate a Check?
If you won’t have the funds available at the time the check is written, you might consider postdating the check. For instance, if you’ll be out of town when rent is due, but don’t have the funds to pay rent early, you might postdate your check. However, keep in mind that it is illegal to intentionally write a bad check; if you’re postdating it with the intention of canceling it before the date, or if you know for certain that you won’t have the funds, you could run into legal trouble.
Can a Postdated Check Be Cashed Before the Date?
The laws differ from state to state, but the short answer is yes.
Once you sign the check, it becomes legal tender, so it’s 100% legal for a bank to cash a postdated check before the date on it. I postdated my check because I didn’t want to miss the due date, and I intended to transfer the funds closer to the date I wrote on the check. Just a day or two after I mailed the check, it was cashed – a full two weeks before the check was dated. The check emptied my checking account, and since I had set up overdraft protection, it withdrew the rest of the funds from a savings account. Luckily, I avoided overdraft fees, but this situation was still quite worrying. What if the check had bounced? What if this created an overdraft and I had to pay expensive fees?
Once you sign a check, it can legally be cashed – regardless of the date you wrote on it – by the payee.
Can You Prevent the Check from Being Cashed Early?
There is a way to prevent the payee from cashing the check before the date: providing reasonable notice to your bank.
If you find it necessary to write a postdated check, and you provide your bank with reasonable notice not to cash your postdated check, then the bank may not legally cash it. In your notice, you’ll want to provide information such as the name of the payee, your account number, the check number and the amount of the check. There are some caveats to this, which depend on the manner in which you provide notice to your bank, according to the Consumer Financial Protection Bureau (CFPB):
- If you provide written notice about a postdated check, your notice is valid for six months. “During that time, the bank or credit union should not cash the check before the date you wrote on the check,” according to the CFPB.
- If you only provide oral notice, your notice is only valid for 14 days. After that 14-day period, the bank or credit union can cash the check, even if it’s before the date you wrote on it.
So what happens if the bank cashes your check despite your reasonable notice? Well, the bank may then be liable to you for damages, like overdraft fees, for instance. According to this eHow.com article, you should first ask your bank manager about waiving any fees. If that doesn’t work, recuperating your losses may require a consultation with an attorney.
What If You Receive a Postdated Check and Want to Cash It?
If you’re on the other end of the transaction, it’s up to you to decide whether to accept a postdated check. If you do accept it, you should check with your bank to see if they can process the check before the date on the check. If the person who wrote the check has provided reasonable notice of postdating to their bank, however, you will not be able to cash the check early. See eHow.com for more information.
It’s a common misconception that postdating your check will ensure that the money stays in your account until the date on the check, but this isn’t necessarily the case. By providing notice to your bank or just not writing a check until you can afford to, you can avoid fees and protect your money.
If you still want to take the paperless route, apply now to go paperless with your mortgage!
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