Hi,

I am having a checking account in a credit union here. Recently I got an offer from American Express and they sent me a check and said me to use it for low APR. I deposited the check in my bank. The bank told that they will have a five days hold on that check and then they will clear it. So I waited for 5 days since it was out of state check. On the 5th Day I saw my online account and found that the check was credited, So I went ahead and paid few bills and credit card. Everything was fine till this point.

After a couple of hours on the same day on which my account was credited, my bank called me and told that my check got rejected and I have to deposit the shortage of amount. I deposited the amount. But the payment which I made for the credit cards all got returned and I was fined badly both by my bank and the credit card company. I called my bank and asked them why this happened, aren't they should take care before updating the acccount to see if my check is cleared or not . I got a reply back that customer should always try to deposit a good check and they cant help it. Just for that one check I ended up paying around 100 dollars as fine, I borrowed money from my friends to pay the credit card. They have increased my APR now.

I was wondering whether a bank will not check before updating an account whether the check is cleared or not? If that one step would have avoided I would have not ended up in all this mess. Is this a fault with the banking system, that's what I heard from the president of the bank. Please share your views so that I can inturn share with my friends and make sure no one will get into problems like in future.

Thanks
Jai

There are rules about how long banks can hold funds on a check. Sometimes it takes longer for the check to get returned and we have already released the money to you, the customer. The fault is with the check that you deposited. It was a credit card check from what you stated, and you must have not had the money available on the credit card to pay the check. You need to know for sure how much money you have available on your credit line with American Express BEFORE you put that check into your bank account. If you feel you did have the money available or that the Credit Card Company gave you a check that they didn't honor for some other reason you need to call the credit card company. The bank is not responsible for those fees. You or the company that did not pay the check are responsible. Many credit card companies send those checks as stuffers in the solicitations and you may not have qualified for that much in a line of credit. You should have contacted them for the line approval before cashing the check as it isn't free money.

Should the BANK not notice if the amount or the check is REAL or not??? They sure keep up with counterfiet cash!

Ok, Mr Burnett....where on earth did you pull out Wauwatosa? Just the fact the you know how to spell it is kind of scary... :-)

Wauwatosa is a nice little town, I don't remember the Last State Bank last time I drove through though....
The check in question was not said to be counterfit, it didn't clear the other bank. Much different than a Fake check. The money not being available is nothing we can know at time of deposit.
On another note if that were the case (Forged Check) I agree with John that there is no way we can know what every check from every bank looks like to authenticate it. Cash is all produced from one location which makes it so much easier to tell if it's real than checks when every Tom, Dick and Harry can print their own. Banks can't control that aspect which is why fraud sometimes works.

Should the BANK not notice if the amount or the check is REAL or not??? They sure keep up with counterfiet cash!

The check itself was not conterfiet, it was a legit check witten against the customers line of credit with American Express. However, the customer wrote the check for an amount greater than the credit line.
As with any check deposited, the bank will not know whether or not there are enough funds in an account at a different bank to pay on the check.
For example:
A teller at the First National Bank of Winamuca NV will not know if John Smith has $500.00 in his account to cover the check he wrote off his account from the Last National Bank of Cederbrug WI. Yes, the teller could call the Last National Bank to see if the check is good, but just because it is good today doesn't mean Mr. Smith will have the money when the check gets there in a couple of days. Also, if teller's called to verify every check they get from every single customer, those lines to cash your paycheck on Friday might get a little long.