The most common reason for a cheque bounce is insufficient funds in the account of the person who wrote the cheque. This means the account doesn't have enough money to cover the amount written on the cheque.
Here are other reasons why a cheque might bounce:
- Closed account: The account the cheque is drawn on has been closed.
- Stopped payment: The person who wrote the cheque has instructed their bank to stop payment on the cheque.
- Incorrect account number: The cheque was written with an incorrect account number, causing it to be rejected.
- Insufficient credit: If the cheque is written on a credit card account, the cardholder may not have enough credit available to cover the amount.
- Frozen account: The account may be frozen due to legal issues or unpaid debts.
Examples:
- You write a cheque for $100 but only have $50 in your account. The cheque will bounce.
- Your account is closed, but you forget and try to use a cheque written on that account. The cheque will bounce.
- You accidentally write the wrong account number on the cheque. The cheque will bounce.
Practical Insights:
- Always double-check your account balance before writing a cheque.
- Keep track of your outstanding cheques to avoid accidentally overdrawing your account.
- Be careful when writing cheques and ensure you have the correct information.
Solutions:
- Contact the bank to understand the reason for the bounce.
- Deposit funds into your account to cover the cheque amount.
- Reconcile your account balance and ensure you have sufficient funds.
- Correct any errors and rewrite the cheque with the correct information.
