How to Deal with a Bounced Payment

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For when you can’t seem to make your payments and expenses line up.

Bouncing payments were more of a problem in previous decades when the use of paper checks were more prevalent. If you had to rely on the mail to deliver your payments on time, well, things sometimes got lost in transit. These days, thanks to near-instant digital payment methods, it’s a much less common occurrence, but it is still possible to send or a receive a payment that bounces, hopefully unintentionally. It’s a confusing, frustrating situation, but it is possible to navigate it.

The first thing you need to do when you discover a payment has bounced is to be fully transparent. If someone else is attempting to get funds from you and the payment bounces, you should contact them immediately. If you leave them in the dark, they may assume that you bounced the payment intentionally, which is a great way to get a collection agency to come to your house and cut your toes off. Call them up, let them know it was an accident, and if you have the money available somewhere else and just need to move a couple of things around, then do so immediately. If you don’t have the money available immediately, you should tell them when you will and promise to pay as soon as possible.

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Once the person you’re doing business with is placated, the next concern is your bank. Bounced payments often result in overdraft or insufficient fund fees. I know, it’s somewhat paradoxical being charged money for not having money, but that’s why you should make sure your account has overdraft protection. Overdraft protection automatically redirects money from a different authorized account, such as a savings account, in the event of an overdraft. Much like the person you were dealing with, it may be prudent to contact your bank and explain your situation. Hopefully, they’ll let you off with a slap on the wrist, but if the bounced payment was especially large, your credit score could be affected, or worse, you could be slapped with criminal charges.

Of course, the best way to skirt bounced payments is to simply be cognizant of how much money you have to your name, and not make promises for payments you can’t keep. That’s a good place to start.

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2 months ago
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