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Home >> Accounts >> Checking Accounts
Old Check Shows Up, but the Money is Gone
Was it fair for my bank to cash a check for $1,000 which I wrote over five months ago, when I currently only had $1.75 in the account? Then they charged me the amount of the check and an insufficient funds fee, when they knew what funds I had available in my account.
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 These problems are not the fault of your bank. You wrote a check for $1,000. I assume you had the funds in your account when you wrote it. At that time you should have reduced the amount shown shown in your account register. Had you done that instead of spending the money a second time, it would have been there when the check was presented for payment.
If instead the situation is that you re-issued a new check to the payee because they said this one was lost, this one that was being replaced should have had a "stop order" placed on it. Then it would not have cleared at all and that would explain why the funds were no longer in your account. In that case, if the bank paid the check in error (because of a stop order) they would have to pay you back. If the payee tried to collect on both checks for the same product or service, they would be liable to you.
Your bank simply received a payment order which you issued. They were following your instructions. Someone held it longer than normal. At six months a check is deemed "stale" if it hasn't been presented for payment. The bank usually reserves the right to pay or not pay a stale check. This should be defined in your agreement with them. In this instance, it didn't reach this time frame so being stale is moot.
The bank received your check and the payee said you promised them $1,000. The bank had the option here to return the check as insufficient, and to charge you a fee, or they could pay the item, overdrawing your account and still charge you a fee. The fee in each case is for processing the check that was presented against insufficient funds.
Some banks charge one fee amount if the item is paid, and another amount if it is returned. Some will also charge a daily fee based on the funds not being in the account. Again, this depends on the terms of your agreement with the bank. It certainly acts as an incentive to bring your deposit account to a positive balance. Had they returned the check, the payee may have been able to charge you yet an additional fee for giving them a bad check.
The bottom line is that if you deduct from your register the amounts of all checks written, it will be there when the checks are presented for payment. It is very important to balance your account regularly. You should do this monthly and review your account in-between with your bank's telephone or Internet banking system. This keeps you aware of what is happening and would alert you to any problems faster.
Published on BankingQuestions.com 10/18/06
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