REGIONAL federal credit union Tip of the Month: How checks work 

You may know how to write a check, and what to do to deposit a check into your account. But do you know what happens to your check after that? Here’s exactly how a check works:

• Writing the Check: You write a check to pay someone. On the check, you write the amount you want to pay, the person or company you’re paying, and your signature.
• Presenting the Check: You give the check to the person or company you want to pay.
• Depositing the Check: The person or company you paid takes the check to their bank and deposits it.
• Bank Processing: The bank sends the check to your bank to make sure you have enough money in your account to cover the amount on the check.
• Payment Transfer: If everything is okay (i.e. you have enough money), your bank transfers the money from your account to the person’s or company’s bank account.
• Money Received: The person or company you paid to now has the money in their account.

But what happens if there isn't enough money in your account to cover the amount on the check?

• Bounced Check: Your bank might not process the check, and it will "bounce," or be returned. The person or company you wrote the check to will not get the money, and they might charge you a fee.
• Overdraft Fees: If you have overdraft protection on your account, the bank might still cover the amount of the check, but you'll likely be charged an overdraft fee. This means you'll owe not only the amount of the check but also the fee.
• Penalty Fees: In addition to potential overdraft fees, your bank might charge you a fee for having a bounced check. The person or company you paid might also charge you a fee for the inconvenience.
• Legal Consequences: Repeatedly bouncing checks can lead to legal trouble or damage to your credit rating. Some places consider it a criminal offense if you write a check knowing there isn’t enough money to cover it.