Postdated Checks: Rules for Writing and Cashing
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What Is a Postdated Check?
A postdated check is a fairly simple concept. Instead of writing today’s date on the check, you write in a future date. For example, if it’s January 28, and you have rent due, you might postdate a check for February 1. This could be so that your landlord doesn’t cash it until your paycheck clears, and your checking account has the necessary funds.
Unfortunately, this is not always honored by banks or the organization cashing the check. First, let’s look at why you would want to postdate a check.
Why Write a Postdated Check?
Most of the traditional reasons you would want to write a postdated check are a bit out of date; it may be easier to simply use direct deposit, electronic transfers, or coordinate directly with the payee.
The biggest reason for postdating today is that you do not have the funds in your checking account to cover payment, but you will after the postdate. This is usually because you are waiting on a paycheck. It could be to cover rent, or pay a vendor for a service, or even simply a personal check to a friend or family member.
Insufficient Funds or To Avoid Overdrawing
Most frequently, postdating a check is an effort to avoid fees. The writer is waiting for money to be deposited or for another check to clear before the payee will be able to cash without overdrawing the writer’s account. If this happens, there’s usually a few fees that are levied, such as an insufficient funds or overdraft fee (and sometimes both), and on the payee’s end, there may be a bounced check fee. Banks will often try to collect this from the writer, if possible.
The problem is that, if you are postdating a check, you already don’t have the funds for the check, let alone the fees. We’ll revisit this later.
Paying in Advance
The other major use of a postdated check is to pay for something in advance. For example, paying for a service before it is completed, like a contractor working on your house. This is more for convenience than lack of funds.
Postdated Check Laws and Rules
Postdated checks are not illegal, but writing a check you lack the funds to pay is. 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.
Banks are not obligated to wait until the date on a check to cash it or deposit funds. However, if you call them and arrange for the funds to not transfer, then they are obligated. This, however, often comes with a fee of about $30 for the bank to monitor your funds.
Businesses may reject a postdated check as a form of payment. They can try to cash the check whenever they please. You should clear it with your bank and your payee before writing a postdated check — check your state’s laws and your bank or credit union’s policy before writing a postdated check. Ask the cashier, or better yet a manager, if writing a postdated check would be an acceptable form of payment. Do not be surprised if they do not allow it, however, even if it is in line with state laws.
Postdated Check Cashing
If you are the payee, cashing a postdated is the same as cashing any other type of check. Because it’s postdated, it’s a courtesy to cash it at the writer’s bank. It is just that, though — a courtesy. It’s not a requirement.
Instead, you may want to deposit the check, as banks will often allow you to make the transaction, but not actually deposit the money until the postdate. If you don’t need the money immediately, this is another courtesy to the writer, and can help keep trust between you and the writer.
Can You Cash a Postdated Check Early?
You can try to cash a postdated check early, but it may or may not work. Banks may be willing or simply ignore the date, and, as mentioned, aren’t legally obligated to delay unless they have explicit, often written instructions from the writer. Many bigger banks, however, will honor postdates as part of banking agreements. Check account disclosures for more information.
When it comes down to it, postdating a check can be risky. You need to trust the payee to not cash it until the postdate, or that the bank they use will honor the date if the check is deposited. It’s best to talk to the payee beforehand and work out an agreement. Find out if they would, instead, simply be willing to accept payment later. Landlords, credit card companies, and other billers may be willing to work with you to change a due date. You can also use your bank’s online bill payment service to schedule payments in lieu of writing a check. This, of course, requires that you have funds, and may only work if you were writing a postdated check for convenience.
If a check is cashed prior to the postdate, and funds are not available, be prepared for a headache and additional fees. Only rely on postdated checks if it is a last resort, and you do not have the funds available, and the payee is unwilling to work with you on when they receive the payment, as they might see holding a check as an escrow situation.
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A former newspaper journalist, Cole spends his free time reading, writing, playing video games, watching movies, and learning about every subject under the sun. He lives with his wife and daughter in Idaho. Follow Cole on Twitter: @ColeMayer42