Reasons why a Bank will reject your cheques.

Most customers find it so annoying and embarrassing for their cheque to be bounced or dishonored. In order to avoid the below happening to you and thus bringing up a host of problems and a headache to boot, check out this post on how to write a cheque properly.

1) Insufficient funds:

This is the most common reason there is why one’s cheque would be rejected and the proper term used by the banking industry to describe this occurrence is “non-sufficient funds (NSF)”. This is where the person who issued the cheque does not have enough money in their account to pay the amount that has been written out. Usually, the issuer is unaware that their available funds are too low for the transfer, thereby causing the bank not to honor the cheque.

2) Not made payable to the right person

In this scenario, what usually happens is that the issuer writes out one name on the cheque and in the receiver’s taste or plain carelessness, he or she deposits it into the business/spouse / child/friend’s account instead. This will automatically cause the cheque to be rejected as it can only be deposited into an account in the name specified on the cheque. There is an exception to this; in an individual’s case, the cheque can actually be deposited into a joint account of which that individual is party to.

3) Signs of fraud:

There are many types of cheque frauds out there and if you are one of the unlucky few to be on the receiving end of such a scam, then brace yourself for some financial nightmares. Banks will check for a number of tell-tale signs such as stains or discoloration on the cheque that may be due to alterations, the cheque’s number that does not seem to change, smeared colors printed on poor quality paper or additions to the cheque that seem to have been written by hand.

4) Irregular signature:

This is probably something that should be known out of common sense but humans will make mistakes every now and then, and when they do such as the issuing of a cheque), you get a whole lot of unnecessary confusion. One such example of this would be when only a person signs on the cheque but two signatures are required in order for the bank to honor it. Another example of this would be that the cheque is not signed at all by the issuer, but this matter can be resolved if there is written a “for deposit only” along with the correct account number.

5) Out of date or post-dated:

In the banking industry, a post-dated cheque is referring to the “cheques which have been written by the issuer for a date in the future”. An example of this occurring would be if an individual requires a piece of artwork to be completed a few months later and the artist agrees to receive a post-dated cheque for the services rendered. This sort of cheque cannot be deposited before the date that is written on the piece of paper. The recipient would be bearing the risk that if the issuer’s account is closed or having insufficient funds when the cheque is presented at the bank, then the recipient will not be able to claim that he or she was duped with a “criminal” cheque.

6) Differences in Amount in words and figures:

This is where the amount that is written in numbers differs from the amount in writing on the cheque. For example, the issuer writes out N123,456.78 in the little box where the numbers are required but in the lines provided to spell out each figure, it is written “one hundred twenty-four thousand four hundred and fifty-six naira seventy-eight kobo only”. Spot the difference? It may seem a little long to the eye but there’s that little mistake of “four thousand” instead of “three thousand”! That’s going to cost you not only a bounced cheque and a fee charged by the financial institution but also some very unhappy receivers! 

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