Three Ways Of Preventing A Check Return


One of the benefits of having a bank account is the check facility that a bank provides to its account holders. A check can be used for several purposes such as payment for purchases, transfer of money in favor of another person, withdrawal of cash from bank account and so on. Payment through check ensures that money is received by the person in whose favor check has been drawn.

Issuing a check is a simple process and requires basic information such as beneficiary name and amount of check. Sometimes, we see in our bank statements that a financial charge has been levied by the bank on account of a returned check. Such a situation can arise in case there is insufficient balance in the bank account or there is some discrepancy in the information that was mentioned on the check by the account holder or by beneficiary while depositing the check.

It is important for the account holder to ensure that all the checks issued by him/her are honored by the bank in order to maintain a good credit reputation and to enjoy a healthy relationship with third parties such as electricity and telephone authorities.

Three Ways Of Preventing A Check Return

Verify Information Twice While Depositing Check:

It is important for the account holder to ensure that the check contains correct information as to the beneficiary name. While depositing a check, beneficiary is required to fill in a deposit slip which is required to be attached to the check issued in his/her favor. Beneficiary is required to enter his/her name and account number on the deposit slip. If there is a mismatch in this information, beneficiary’ bank will not process the check in favor of the beneficiary.

For Instance, an individual has issued a check in favor of his sister for an amount of $ 20,000. Sister’s name is Katie and her account number is 00000021234. However, the account number entered in deposit slip is 000000121234. Hence, it is important to ensure that correct information is entered on the check by the issuer as well as on the deposit slip by beneficiary.

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Ensure Balance In Bank Account:

It is important for the payer to ensure that sufficient balance is available in his/her account both at the time of issuance of check and the date on which it is presented for payment by the beneficiary. Payer should ensure that the beneficiary deposits the check in his/her account within a reasonable period of time. There can be a situation where sufficient balance was available in account holder’s account at the time of issuance of check but insufficient balance when check was actually presented for payment.

Such a situation can be avoided by obtaining a confirmation from the beneficiary on the date on which he/she plans to deposit the check in his/her account. Similarly, beneficiary should obtain a confirmation from the payer on the status of payer’s account balance before depositing the check.

Check Overdraft And Credit Facility:

Banks may offer overdraft and credit facility to its account holders based on their credit reputation. Account holders can use this facility in case they are falling short of money at the time of making a payment. However, it is important to check the overdraft limit, period and financial charges that may get levied in case overdraft facility is used by the account holder.

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