Bounced check

A bounced check is a check that does not have a sufficient amount of cash in the underlying bank account to support the payment, so the issuing bank refuses to honor it. When a check bounces, the issuing bank typically charges the writer a fee. In addition, the entity cashing the check will also be charged a fee. When a business finds that a customer's check has bounced, it usually stops granting credit to that customer, requiring cash in advance for all future payments.

When an issuer has an overdraft arrangement with its bank, checks can be written that do not have sufficient supporting funds and yet will not bounce, because the issuing bank provides the additional cash.

Similar Terms

A bounced check is also known as a not sufficient funds check.

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