You’ve probably heard of — or tried to use — the post-dated check strategy. It seems logical: You owe someone or a business money, but you don’t have the necessary funds in your bank account just yet. It’s OK — you know you’ll have the money later, so you write the check to meet your financial obligation. As a precaution against overdrafting your account or spending money intended for something else, you date the check a few days or weeks into the future, when you’ll certainly be prepared to pay.
It seems like a great plan. Too bad it doesn’t work.
The only reason post-dating a check ever works (and I’m about to ruin this) is because people think checks are invalid if they’re dated in the future. Because people think the checks won’t go through, so they don’t deposit them. If they attempted to deposit them, there wouldn’t be an issue (unless a check bounces or there’s some other reason it’s invalid).
The machines that read checks process a lot of information, but they don’t look at the date, said Nessa Feddis, senior vice president and deputy chief counsel for consumer protection and payments at the American Bankers Association’s Center for Regulatory Compliance. Dating your check may not affect when a recipient cashes it (though old checks may not be accepted by some banks, depending on state laws), but dates still serve a purpose, Feddis said.
Banks keep image records of checks after they’re deposited, so the date becomes another aspect of those records. For instance, if you write a check in December and it’s not cashed until January, and you need proof that you wrote the check during the previous year, the check record would show that.
Check use is certainly declining, Feddis said, but plenty of people use them instead of cash when electronic payment isn’t an option, so it’s important people know how to use them. If you’re concerned about not having enough money in your account, post-dating the check isn’t a good solution, because you might incur fees or even end up with a collection account on your credit report. If a bounced check results in a late payment or a collection item on your credit report, your credit score will take a hit. (Wonder if a bounced check has affected your credit? You can see your credit scores for free on Credit.com.) You may feel stuck, but it’s best you try to work out a payment arrangement with your creditor or whomever you owe, so no one gets tangled up in an unnecessary check mess.
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