The month of September is always tough for me because I have to do my tax returns. If you’re like me, then this time of year may be particularly hard since it means you owe money that you might not necessarily have. Although the vast majority of Canadians pay their taxes on time, there are still some who occasionally run into trouble.
If you’ve overdrawn your bank account by doing so and caused a cheque to bounce, then you could be required to pay up to $100 for each cheque that bounced. This is because finance charges are added to the fees of cheques you write, much like interest rates on credit cards. If you have done this, don’t worry. There are ways to avoid paying any penalties and we’ve outlined some of them below:
If you find out that your bank account is overdrawn before a cheque is cashed, then the best thing to do would be to cancel it and ask for another one (if there’s time to do so). If you aren’t able to do this, then simply don’t cash the cheque until you have enough money in your account. Of course, this isn’t very nice for the person who gave it to you and might result in them thinking twice about doing something like that again. You can also use an alternative method of payment to ensure you don’t bounce any cheques.
You could always pay the fee for bouncing a cheque by asking your bank to transfer money into your account from another one of yours or even ask if they could transfer some over from an emergency fund. This will allow you to cover whatever fees have been incurred without having to wait until you get paid again.
If you’ve written a cheque and then realized that it isn’t covered, don’t make the mistake of crossing out the words “not good” (or something like that). Although this might seem like the right thing to do, it could actually be illegal. You should instead write those same words on another piece of paper and include them with the cheque. You could also use it as a note to say that your account was overdrawn at the time.
Check Bounce Penalties In Canada
Just remember, you are always responsible for any mistakes that are made on your cheques since they are drawn from an account that belongs to you. According to the Canadian Payments Association, if your cheque bounces and you don’t take responsibility, then you could end up receiving a penalty that may range from $25 to $100. You should also know that if someone hands it into their bank, then they can attempt to collect the fee too. Even though this is against the rules and they won’t be able to do so, ignorance of these things is commonplace and you may find you end up paying the penalty fee simply because of who you are.
As with any other account like your credit card or bank account, you should always ensure that all transactions on a chequing account are accurate and up to date before they go through. This way, if any mistakes do happen to take place, then at least you won’t have to worry about paying any additional fees that are associated with it.
If you find yourself in this situation, then the best thing for you to do is get hold of all of the related documentation and sort it out as soon as possible. By doing so, you should be able to stop any further action from being taken against you. If you are still having trouble, then you could always give the company involved a call to express your confusion. Just remember that they can’t take anything further without first giving it to you in writing.
What Are The Different Types Of Cheque Payments?
When someone gives you a cheque, there are two different types of payment that will be made. The first is “payment in full” which is basically just what it sounds like. The second type is called “payment in part” and this means that the cheque won’t go through completely. This will happen if the amount you receive is less than the total on your account.
When something like this happens, you should always contact both parties involved to find out where they stand with the situation. This should allow you to get the required information that will help you resolve it. Additionally, this could also prevent any of your funds from being frozen while things are sorted out.
It’s not just the bank where you have an account that can report a cheque bouncing. If someone gives one to someone else who has an account with another institution, then that institution will also report it as well. The only difference is, they won’t go looking for you to collect the fee — instead, they’ll just charge you an administration fee. It would be a good idea to find out what that amount is before anything goes through just so you know how much your account can handle.
If someone decides to cancel a cheque and either doesn’t tell you or tells you verbally, then they could be breaking the law. There are two different situations where this can happen:
If someone gives you the cheque and then decides that they don’t want it anymore, then as long as they notify their bank within six months of putting it through then there shouldn’t be any problems. This can also work if they have given you permission to use it for something, but change their mind before the transaction is complete.
If someone gives you a cheque with instructions on how to use it, then they are responsible for what happens until that cheque is returned or canceled. Should there be any issues with it, then they could be held accountable for the amount that is missing. If this does happen, then you should contact them right away so that you can resolve things as soon as possible.
If there are any funds taken from your account and you don’t know where they have gone, then look to see if someone has written a cheque for less than the amount you have available in your account. This will allow them to take out more money than they are entitled to, but it should also mean that there is an overdraft in place. As long as this isn’t checked before any transactions occur then you won’t be charged for it.
If someone gives you a cheque and their bank puts a hold on it, then you should be able to see this immediately. If you can’t see the hold and the person claims that they put one on their account, then there may be an issue with what they are saying.
If someone gives you a cheque, but only part of it goes through, then make sure that you don’t spend any extra money. Instead, you’ll need to wait until the cheque has been paid in full and then use that instead. If you do spend more than what is in your account, then there’s a chance that your bank will put a hold on all of your funds when they go looking for the missing amount.
In some cases, people may decide to give you a cheque as a gift, meaning that there is no money in their account at the time of it going through. While this may seem like an easy way to get some extra cash, they can still be charged for writing an NSF cheque. This means you would still need to pay any fees that are involved.
Since a cheque can bounce for a number of different reasons, you’ll want to get the matter sorted out as quickly as possible. This will help to ensure that your account always has enough money in it so that nothing like this happens again. If there is someone who has written you an NSF cheque then you need to contact them directly to sort out the problem.
What Is an NSF cheque?
You may have noticed that some cheques are marked NSF or “not sufficient funds”, which means that they were not paid by the account holder. This could mean there was a problem with their bank, but it can also be because of something else.
If you bounce a cheque, your bank will charge you a fee. If you don’t have the money to cover the transaction, your account could be overdrawn and there may be other fees that apply as well. For example, if you don’t have enough money in your account to cover the cheque you wrote, but at least $50 more than what was on it, your bank could still charge you a fee.
If the receiver bounces a cheque, they must pay a default amount to the payee. Usually, this is between $15 and $30 per cheque, but it varies from agreement to agreement. In some cases, if there are multiple attempts to cash or deposit the same cheque, the default amount will increase.
The receiver can also be charged additional expenses if the bank has to pay for a returned cheque. These costs are usually much lower than what they would charge in fees but can add up quickly in addition to the fees that have already been assessed.
If you only bounce one cheque, you may not have to pay more than the necessary fees, but multiple bounced cheques are considered a sign of more severe financial difficulty. This could result in your account being closed or your credit is impacted.
What is the best way to avoid NSF cheque charges?
The best way to avoid NSF cheque charges is to only spend the money that you have available in your bank account. Keeping an accurate list of transactions and checking your balance regularly can help you stay on top of this.
If someone has written an NSF cheque to you, contact them immediately. It is possible that the money will still be in their account by the time they are contacted, but it can’t hurt to ask if something strange happened.