Postdated Check Cashing: When you are getting a post dated checks or thinking about writing one, it’s important to know how they work . It may not be the way you are expecting it.
A postdated check is a check with a future date written on it. For example, assume that today is January 1, and you’re writing a check. In general, you’d put the current date of January 1 on the check. But you could just as easily postdate it a week and write January 8 on the check.
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.
Basics of a Postdated Check
People usually postdate checks when they want the recipient (the person or business receiving the payment, also known as the payee) to wait before depositing the check. Two potential reasons for this include:
The check writer does not have sufficient funds available when writing the check, but those funds will be available on the future date.
The check writer is paying for something ahead of time—before the payment is due or the service has been completed.
Postdated Check Laws and Rules
These caveats apply when writing a future date on a check:
No fraud Allowed
There’s no law making postdated checks illegal. However, it is illegal to write a check when you know you don’t have the funds to cover it. However, It is always illegal to defraud somebody who sells you something by pretending to pay but never intending to do so.
Not a Written Agreement
Just because it’s legal doesn’t mean things will work out the way you intended. The date you choose to use is not part of a legally binding agreement between you and the payee.
In most cases, the recipient can deposit the check at any time. Unless you set things up correctly with your bank, the bank is free to pay funds out of your account before the date shown on your check.
Confirm With your Bank
Writing a future date on the check guarantees nothing. Typically, you’ll have to provide written instructions, and your bank can tell you exactly how to do that. Banks have different policies for how long they will continue to monitor to prevent premature payment. Expect to pay at least a $35 fee.
Cashing a Postdated Check
If you are the payee, cashing a postdated is the same as cash 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 Checks 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.
Postdating Checks Alternatives
If you have the option, it is best to avoid writing postdated checks. The only way to guarantee they’ll actually work is to pay extra fees to your bank. If you’re unwilling or unable to pay your bank to monitor your account, you’re at the mercy of whoever you give the check to.
Even if your payee is honest, they may make the honest mistake of forgetting (and leaving you with bad check fees).
Usually, postdated checks are used because you’re short on money—and that’s exactly when you can’t afford extra fees. Instead of writing a postdated check, try the following:
If you’re postdating a check for timing or convenience reasons (say you’ll be out of town and unable to pay when you usually do), schedule the payment through your bank’s online bill payment service.
If you need a few extra days for funds to clear in your account, ask your payee for an alternate payment date. Some billers are happy to arrange a payment date that works well with your cash flow (they’ll make your due date a few days after your direct deposit typically comes in).
Sign up for automatic electronic payments—but only if you trust the payee. Dishonest or disorganized businesses may make withdrawals from your account before you’re ready.
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