Let’s say I write a check for $100 to John. John endorses the back of it and signs it over to me, and I give him cash for it. I then take it to my bank and deposit it into my bank account which has a zero balance. Would it bounce?
You’d be out $100.00. If you deposit your own check into your own account (regardless of whose name is on it, or who signed it) there’s no movement… but as to whether it would actually bounce is an interesting question. My guess is, you’d either get a weird look from the teller, and have your check handed back to you, or if you used an ATM or some other tellerless way to deposit it, you’d get a call from the bank saying that the transaction is impossible.
By the way, John would be completely unaffected by the transaction, so he’d just be $100.00 richer. The two things that matter is whose account it is coming out of, and whose account it is going into. Those parties are both you.
Typically, banks process all despoits before withdrawals. So, the deposit of $100 would go in, giving you a $100 balance. Then, the bank would process the check, and your balance owuld go back to $0.
Hey Joey P, it’s John again. Can we do this again? For $1,000?
I’d expect at least raised eyebrows and flat refusal to handle the cheque; at worst, investigation for fraud - because there are (or used to be) a number of well-known scams involving circulating cheques to create false balances.
This type of fraud is known as check kiting. Banks have known about it for a long time.
BTW this isn’t fraud, and it doens’t get wierd looks. It’s done all the time with payroll. If I hand out payroll checks and the employees cash them out of the register, I then deposit them into my bank account (which is the drawing account as well). It not only shows that the person received the money (well, helps if it would ever be an issue), but it makes the check clear the bank so I can reconcile the checking account. And yes, TellMeI’mNot Crazy, John would be $100 richer which is what was intended when I wrote him the check.
Kiting involves floating checks between different banks to take advantage of the float period. There is no float period if you deal with the same account as in the OP.