Businesses may reject a postdated check as a form of payment — and this is well within their legal right. You should clear it with your bank and your payee before writing a postdated check. The check writer is waiting for money to be deposited or for another https://www.wave-accounting.net/ check to clear before the payee will be able to cash the check without overdrawing the writer’s account. There are multiple reasons why you may need to write a postdated check and the reasons can vary greatly depending on your personal situation.
- From the perspective of the check issuer, there should be no journal entry to record the reduction in cash until the date listed on the check.
- A payday borrower typically writes the lender a postdated personal check for the amount of the loan plus a fee.
- You can try to cash a postdated check early, but it may or may not work.
- Unfortunately, the fact is that there’s generally no actual obligation to honor the date on a check.
The date you choose to use is not part of a legally binding agreement between you and the payee. In most cases, the recipient can deposit the check at any time, and the bank is free to pay funds out of your account before the date shown on your check. Realistically, the recipient of a post dated check may never notice that the check has been post dated, and so will record and deposit it at once.
What is a Postdated Check?
Occasionally, I like to skim through Reddit’s personal finance section for any interesting money topics. Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. We’re the Consumer Financial Protection Bureau (CFPB), a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. Read on to find out about the legality of post-dating checks, and some of the consequences that could result.
A postdated check is one that is written with a future date indicated on it. This is usually done to account for an anticipated delay in deposit. For example, you may decide you would like to postdate a check if you are sending in a bill payment earlier than the due date. It is also common to postdate a check if there are insufficient funds in the checking account at the time the check is written.
Postdated Check: Is it Legal & How to Write One
In other words, if you have the intent of defrauding someone by intentionally writing a check, knowing you will not have the funds on the postdate, it’s illegal. Postdated checks are normal checks, but the person writing the check chooses to write a later date on it. In other words, in most cases you can accept a postdated check, and you can deposit the check before the date on the check unless there is an agreement or contract to deposit the check on a future date. When you write a check, you are essentially giving the payee’s bank permission to take the money out of your account when the check is presented for deposit as discussed above. The funds won’t actually be transferred until the check clears, which can take a few days. In addition to criminal penalties, state laws authorize civil fines for writing bad checks.
What’s the worst that can happen if I postdate a check and it gets cashed?
Keep in mind that waiting to cash a postdated check still won’t guarantee that they’ll have the money to cover it. Say your roommate writes you a postdated check for their half of the rent because they’re expecting to get paid by a certain date. Banks can establish different policies for dealing with postdated checks. For instance, your bank might honor the date that’s written on the check and hold any postdated checks for deposit until that date arrives. Or you may be able to request that a postdated check you’ve written be held over until the date noted on the check.
That means the bank must wait to cash the payment until the date stated on the paper or until six months is up, whichever comes first. But if the consumer gives oral notice to the bank, the institution must only wait 14 days before processing the note – even if that happens to be before the date on the check. Additionally, the only time a bank can be held liable for processing a postdated https://adprun.net/ check before the indicated date is if that notice is still valid. In which case, the CFPB says the institution may may be on the hook to cover damages such as the cost of overdrafts and other fees. Consumer advocates who spoke with Consumerist say that while there are several reasons someone might think it’s a good idea to use a postdated check, it’s not generally recommended.
What is a Post Dated Check?
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In such cases, the defendant’s admission, if believed, would provide the required proof of the defendant’s criminal intent to defraud the victim with a postdated check. The Uniform Commercial Code (UCC) enables lenders to loan money, secured by a borrower’s personal property. Adopted by nearly every state, the UCC is a standard https://accountingcoaching.online/ set of business laws that was first published in 1952 to regulate financial contracts. Article 3, Section 113 of the UCC outlines the rules for postdated checks. This section allows financial instruments to be either post or backdated and indicates that the payment cannot be made until the specified date on the instrument.
When someone writes a check intending not to cover it, they can be guilty of a theft crime. Some states might have a specific name for the crime such as theft by deception, passing bad checks, or negotiating a worthless instrument (checks are a type of “negotiable instrument”). Whether the crime is a misdemeanor or a felony often depends on how much money was involved. If the postdated check was received as payment on accounts receivable, the accounts receivable balance is not reduced until the date of the check.
