Also, cheques are a matter of trust. The bank benefits from people using chequing accounts, all the fees and earning interest on money “in transit”.
They certainly want to discourage people from distrusting and refusing to accept cheques and moving to some other system, like cash, where the bank does not get a cut (or credit cards, if the cc company gets more money than them).
Posters in this thread seem to believe that bounced cheques are the fault of stripper-loving low-lifes, pothead roommates and others of lowish repute, though why stripper-loving lowlifes are lowlifes I have no idea. But bank drones should be included in the pothead demographic.
Years ago I switched banks because the brainiacs in the one I dealt with twice bounced my cheques and once because I was overdrawn, so Pay Up Immediately Or Else. (These things do end up in your permanent record.)
The bouncing-cheque and overdrawn Kenm wasn’t me. Had any of the bank geniuses bothered to look at the address, the account number or heaven forbid, the signature, they would have known it.
So I walked across the street to a different bank. Not that the first one cared, of course. And not that the second one did, either; In the crosswalk I probably passed a victim from the second bank moving to the first one.
I’d like to know why they won’t even give you a savings account if you’re on ChexSystems. How does this require any trust on their part? I deposit money. I withdraw it. If the money isn’t there then I get no money, whether it’s in person or ACH. I’m not understanding it.
Similar deal with a debit card. If you request a debit card then suddenly those old bounced checks are oh-so-important. If a customer tries to spend more than they have available then the bank can decline the transaction. Why is that so complicated?
The reason banks don’t like bounced checks is because of “float”. Float is the time delay between when the money for the check is withdrawn from the payers account and deposited in the payees account. When you deposit a check, your account is immediately credited, with the assumption that the payers bank will then send the money to cover it. For a period of time until the check clears, that money exists in two places - in your account and the payers.
If the check bounces, the payers bank never sends the funds, but by then you may have already withdrawn the money from your account and skipped town, leaving the bank on the hook for the loss.
Technically, that’s just writing bad checks.
Check “kiting” is when you use checks from one bank to cover a check that exceeds the balance of another account in a different bank. It can be part of a paper hanging scheme or it can simply be a temporary measure for people low on cash to make ends meet until payday. Both are techically fraud.
Banks won’t even open a savings account for you if you have no credit history at all, I went through this at multiple banks in the USA. No amount of sense making will sway them.
I have to think cases like yours where the bank mixes up two accounts under people with similar or the same name are relatively rare. Considering that most cheques are processed by automated machines that reference the account number bar-coded in the check.
Most bounced checks are from either people low on funds or people looking to defraud the system.
Strippers and the people who love them, I assume, would mostly deal in cash. Lots of singles mostly.