Why is your cheque dishonoured?

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Has it ever happened that you that a cheque presented by you has been dishonoured by the bank? Money9 explains what is a bounced check and when can the bank dishonour your cheque.

What is a dishonoured cheque?

If the amount mentioned on your has been credited to your account or the cheque issued by you has been paid by the bank then your cheque has been honoured. But, if the bank has not debited or credited the amount then your cheque has probably bounced.

When can the bank dishonour your cheque?

There are legions of reasons behind a bounced cheque. It is pertinent to keep these loopholes in mind to avoid the bouncing of cheque next time.

Funds deficiency

Make sure you have enough funds in your bank account before issuing a cheque.  A cheque will be dishonoured for lack of funds.

Incorrect signature

Your signature should match with the specimen signature available with the bank. If the signature is irregular, your bank won’t accept the cheque.

Expired cheque

Date plays a crucial role. If the date that you have mentioned has already passed or the date is not written properly then the bank can dishonour your cheque. A cheque is valid for three months from the date of issue.

Illegible amount

If the amount is not written properly, both in words and numbers, then your cheque can bounce. The amount written in words should match the amount written in numbers.

Torn Cheque

If the cheque is damaged, the bank will not accept the cheque. Make sure your cheque is not torn and doesn’t have any stain.

Overwriting

While writing a cheque, make sure that you don’t overwrite so that it becomes illegible to read. The bank will immediately refuse the cheque.

Frozen account

If the account is frozen by the government or court, the bank will refuse to honour the cheque.

‘Stop payment’

If the bank is ordered to stop the payment by the drawee then the bank can dishonour the cheque.

Closed account

The bank can dishonour the cheque is the account is closed by the drawer before the cheque is presented by the payee.

Also, if the bank thinks that the cheque is suspicious or it smells any fraud, then the bank has all the rights to dishonour your cheque. So, the next time you write any cheque, make sure that you keep all these things in mind to make hassle-free payments.