What Is a Crossed Check?
A crossed check is any check crossed with two parallel lines, either across the whole review or through the top left-hand corner of the bill. This double-line notation signifies that the statement may only be deposited directly into a bank account. Therefore, such checks cannot be immediately cashed by a bank or by any other credit institution.
- A crossed check is a check that is struck with two parallel lines, either through the top left-hand corner of the tab or horizontally across the whole bill.
- Crossing a check provides specific instructions to a financial institution regarding how the funds can be handled.
- Crossed checks are predominantly used in countries across Europe and Asia, as well as Mexico and Australia.
Understanding How a Crossed Check Works
Predominantly used in Mexico, Australia, and several European and Asian countries crossed checks signal specific instructions to a financial institution regarding how the funds may be handled. Most commonly, struck checks ensure that a bank strictly deposits the funds into an existing bank account.
Such recipient banks are forbidden from immediately cashing such checks upon initial receipt. This provides a level of security to the payer because it requires that the funds be handled through a collecting banker.
While the precise formatting may vary between nations, two parallel lines are the most frequently used symbols. These lines are sometimes paired with the words “& Co.” or “not negotiable.”
In rarer cases, the phrase “account payee” may also be written on the check as an alternative method of conveying the aforementioned cashing instructions.
Crossed Check vs. Uncrossing a Check
Once a check is crossed, the payee can’t uncross it. Furthermore, such crossed statements are considered non-transferable, meaning they cannot be signed over to a third party. The only action permitted is for the payee to deposit the check in an account that the payee holds in their name.
Although the payee cannot uncross checks, the payer can do so by writing “Crossing Canceled” across the front of the bill. Still, this activity is generally discouraged because it eliminates the protection the payer initially set in place.
Crossed checks are rarely used in the United States, and anyone attempting to deposit one is likely to encounter problems.
Should a receiving bank fail to comply with the crossing, it can be deemed as a breach of contract between the institution and the customer who wrote the check. If the payee did not have the funds available to cover cashing the bill, the bank might be held responsible for any associated losses.
An open check, referred to as a bearer check, describes any statement that is not crossed. Such reviews may be cashed at the teller counter, with the funds being provided directly to the payee.
How Long Does It Take a Check to Clear?
Here’s how long it takes for funds to be available in your account.
Check use is becoming less frequent, especially since more people are adopting electronic banking. But there are still people who like to use these slips of paper to conduct transactions. For example, maybe you’re a landlord whose tenant writes out a check for the rent each month. Or perhaps your dear old aunt still sends you a check for your birthday every year.
Whatever the reason, you should be aware that you may not have access to the total amount right away when you deposit it into your bank account—even if your balance indicates otherwise.
If you try to use the funds right away, you may run into problems—even bouncing payments and getting charged by your bank. So it pays to understand the basics of checks and hold times. Read on to find out more about how long it takes for checks to clear and how you can avoid costly fees that may result from any misunderstandings.
General Hold Times
When you open up a bank account, financial institutions always outline their policies about deposits, including hold times for check deposits. Banks place these holds on checks to ensure the funds are available in the payer’s account before giving you access to the cash. By doing this, they help you avoid incurring any charges—mainly if you use the funds right away.
- Financial institutions always outline their hold policies when you open up a bank account.
- Most checks take two business days to clear.
- Checks may take longer to clear based on the amount of the bill, your relationship with the bank, or if it’s not a regular deposit.
- A receipt from the teller or ATM tells you when the funds become available.
It usually takes about two business days for a deposited check to clear, but it can take a little longer—about five business days—for the bank to receive the funds. How long it takes a check to clear depends on the amount of the bill, your relationship with the bank, and the standing of the payer’s account. Wait a few days before contacting your bank about holds on deposited checks.
Of course, the hold time often depends on the nature of the check. A bank may choose to hold a statement longer if it’s an unusual deposit. Suppose you’ve never deposited a check from that payer before, if the bill is for a significant amount, or if the statement is from an international bank. The latter requires a much longer hold time because it can’t be easily verified. Hold times for these checks depend on your institution, so you should check with someone about the policies.
Check hold policies vary between banks, so check with your institution how long you have to wait to access the funds.
Why Your Check Is on Hold
There are several reasons banks hold checks. Your bank may have a deposited check if there are insufficient funds in the payer’s account or if the payer’s account is closed or blocked for some reason. Banks usually resend checks with issues to the paying institution, resulting in a longer delay for the depositor.
Some banks also issue holds for deposits on new accounts. Accounts with no or little history may automatically qualify for holds on all check deposits until the bank feels you have solidified your relationship with it. Accounts that have adverse history—that is, accounts that frequently bounce payments or go into overdraft—may also have checks held.
The payer also has a lot to do with hold times as well. If you’ve never deposited a check from that person before—and it’s a sizable amount—your banking institution may choose to hold it until it clears.
Certain institutions may hold checks deposited through mobile banking apps or the automated teller machine (ATM). These deposits have to be verified and cross-checked before the bank can release the funds. It’s always a good idea to check with the bank about its policy regarding its hold times for these types of deposits.
Your Deposit Receipt
When you deposit a check, whether at an ATM, a teller’s counter inside the bank, or a drive-through window, you typically get a receipt that usually says when the funds will be available. Keep the receipt handy until the check clears. The funds-availability date on the receipt lets you know when it may be time to contact the bank regarding hold inquiries. However, if you don’t receive a receipt, you’ll need to get your bank to check on this.
There are times when the bank will override the hold for you. If the wait has been on too long in cases of emergency, if you’re an excellent customer, or if the bank decides to verify the check at the time of the deposit, you may be off the hook. That generally requires a trip to your branch. Although it will cost you some time, it may be worth it if you need the funds right away or if it’s an extensive check that just can’t wait.
Depending on the amount of the check, you may have access to the total amount in two days. Some banks make a portion of the check available immediately or within one business day. For example, your bank might make $150 or $200 of a $500 check available directly or within one business day of the deposit and make the balance of the check available in two days.
The bank may be likely to clear checks right away if you have a consistent history with a particular payer. Say you’re a freelancer and receive reviews every other month for work you do for that company.
The bank may hold the initial check to make sure it clears. Suppose you let them know you are expecting similar statements from the same company regularly. In that case, the bank may release the funds to you for subsequent deposits after a pattern is established.
It bears mentioning again that large deposits may come with a longer hold time. Some banks may hold checks that total $1,500 or higher for as many as ten days.
The number of days the bank holds these checks depends on your relationship with the institution. You’re more likely to get the money immediately—or within fewer than ten days—if you have a healthy account balance and no history of overdrafts. A history of overdrafts and low account balances may mean you’ll have to wait the entire ten days to receive the money.
What Is a Bounced Check?
A bounced check is slang for a bill that cannot be processed because the account holder has nonsufficient funds (NSF) available for use. Banks return, or “bounce” these checks, also known as rubber checks, rather than honouring them, and banks charge the check writers NSF fees.
Passing bad checks can be illegal, and the crime can range from a misdemeanour to a felony, depending on the amount and whether the activity involved crossing state lines.
- A bounced check occurs when the bill writer has insufficient funds available to fulfil the payment amount on the check to the payee.
- When a check bounces, they are not honoured by the depositor’s bank and may result in fees and banking restrictions.
- Additional penalties for bouncing checks may include negative credit score marks, refusal of merchants from accepting your bills, and potentially legally trouble.
- Banks often offer overdraft protection to prevent accidental check bouncing.
Understanding Bounced Check
Often, bad checks are written inadvertently by people who simply are unaware that their bank balances are too low. To avoid bouncing checks, some consumers use overdraft protection or attach a line of credit to their checking accounts.
A bounced check may result in fees, restrictions on writing additional reviews, and negative impacts on your credit score. Writing too many bounced checks may also prevent you from paying merchants by check in the future. Many merchants use a verification system called TeleCheck to help them determine if a customer’s bill is good. If this system connects the statement you’ve just presented for payment to a history of unpaid bills, the merchant will decline your check and ask you for a different form of payment.2
Are There Fees for Bounced Checks?
When there are insufficient funds in an account and a bank decides to bounce a check, it charges the account holder an NSF fee. If the bank accepts the bill, but it makes the account negative, the bank charges an overdraft (OD) fee. If the account stays negative, the bank may charge an extended overdraft fee.
Different banks charge different fees for bounced checks and overdrafts, but as of 2020, the average overdraft fee was $33.47. Banks usually assess this fee on drafts worth $24, and these drafts include checks and electronic payments and some debit card transactions.
What Happens When a Check Bounces?
Bank fees are just one part of bouncing a check. In many cases, the payee also assesses a charge. For example, if someone writes a review to the grocery store and the check bounces, the grocery store may reserve the right to redeposit the check along with a bounced check fee.
In other cases, if a check bounces, the payee reports the issue to debit bureaus such as ChexSystems, which collects financial data on savings and checking accounts. Adverse reports with organisations like ChexSystems can make it hard for consumers to open checking and savings accounts in the future. In some cases, businesses collect a list of customers who have bounced checks, and they ban them from writing reviews at that facility again.
How to Avoid Bounced Checks
Consumers can reduce the number of bounced checks they write by tracking their balances more carefully, using a secure system of recording every single debit and deposit on a check register as soon as it occurs, or keeping close tabs on their checking account using online banking.
Consumers can also fund a savings account and link it to their checking account to cover overdrafts. Alternatively, consumers may opt to write fewer checks or use cash, debit cards, immediate online payments such as mobile wallets, PayPal, or the likes for discretionary spending.
What Is an Outstanding Check?
An outstanding check is a check payment written by someone but has not been cashed or deposited by the payee. The payor is the entity who writes the bill, while the payee is the person or institution to whom it is written. An outstanding check also refers to a statement that has been presented to the bank but is still in the bank’s check-clearing cycle.
An outstanding check represents a liability for the payor. The payor must keep enough money in the account to cover the amount of the unpaid bill until it is cashed, which could take weeks or sometimes even months.
Checks that are outstanding for an extended period are known as stale checks.
- An outstanding check is a financial instrument that has not yet been deposited or cashed by the recipient.
- An outstanding check is still a liability for the payor who issued the statement.
- Checks that remain outstanding for long periods run the risk of becoming void.
How Outstanding Checks Work
One of the ways of making payment for a transaction is by check. A check is a financial instrument that authorises a bank to transfer funds from the payor’s account to the payee’s account. When the payee deposits the bill at a bank, it requests the funds from the payor’s bank, which, in turn, withdraws the amount from the payor’s account and transfers it to the payee’s bank. When the bank receives the total amount requested, it deposits it into the payee’s account.
A check becomes outstanding when the payee doesn’t cash or deposit the check. This means it doesn’t clear the payor’s bank account and doesn’t appear on the statement at the end of the month. Since the bill is outstanding, this means it is still a liability for the payor. Once the payee deposits the check, it is reconciled against the payor’s records.
Checks that remain outstanding for long periods cannot be cashed as they become void. Some statements become stale if dated after 60 or 90 days, while others become void after six months.
Outstanding checks that remain so for an extended period are known as stale checks.
Risks and Outstanding Checks
If the payee doesn’t deposit the check right away, it becomes an outstanding check. This means the balance remains in the payor’s account. If the payor doesn’t keep track of his account, he may not realise the bill hasn’t been cashed. This may present the false notion that more money in the budget is available to be spent than there should be. If the payor pays some or all of the money that should have been held in reserve to cover the check and then said check is later cleared, the account ends up in the red. When this happens, the payor will be charged an overdraft or non-sufficient funds (NSF) fee by the bank unless the account has overdraft protection.
How to Avoid Outstanding Checks
Forgotten outstanding checks are a common source of bank overdrafts. One way to avoid this occurrence is to maintain a balanced chequebook. This can help prevent any unnecessary NSFs if the payee decides to cash the check later.
You can also call or write to remind the payee that the check is outstanding. This may encourage them to deposit or cash the check. If they haven’t received the payment, this may nudge them to notify you to reissue the check.
With banking activity becoming increasingly electronic, another way to avoid writing a check and forgetting about it is to check the account’s online bill pay service. This should provide real-time information about the total dollar amount of reviews outstanding and the total dollar balance present in the store.
Outstanding Business Checks
When a business writes a check, it deducts the amount from the appropriate general ledger cash account. If the funds have not been withdrawn or cashed by the payee, the company’s bank account will be overstated and have a larger balance than the general ledger entry. To reconcile the bank statement, so the company’s cash account in its financial statements is consistent with the cash in its bank account, the company must adjust its “balance per bank,” which refers to the ending cash balance on a bank statement.
As businesses have to abide by the unclaimed property laws, any checks that have been outstanding for a long time must be remitted to the state as unclaimed property.