Money at 30: What I Just Learned About Postdated Checks
Remember last week when I shared how I was preparing for my extended trip, including dropping off my rent check before departing? Well, when I wrote said check, I dated it for the first of next month (as I assume most people would). This is a practice often referred to as “postdating” that I thought meant one thing but, as luck would have it, I was wrong.
While you can probably tell where this one is going, let’s back up and take a look at what postdating is and how my eyes were opened this week.
What is Postdating a Check?
Put simply, postdating a check just means filling in the “date” section of a check with a day that’s sometime in the future. I presume most cases of post-dating come in situations similar to mine — where a tenant may be dropping off rent for a landlord but is subtly asking them not to cash the check until it’s actually due so that paychecks can be processed when funds become available. While postdating checks is a move that can also be associated with check fraud (which is of course a crime), there’s nothing illegal about the practice on its own and, while I have no data to back up my assertion, it seems pretty commonplace to me.
If you’re like me, you may have assumed that banks would be unable to cash checks that bore future dates — but you know what they say happens when you assume…
As it turns out, there are no rules in place that prevent a check recipient from cashing a postdated check nor are banks obligated to recognize postdating. That’s what I found out after coming across this post from NerdWallet regarding the apparently meaningless practice. In their post, they note that many banks even state in their account disclosures that they will accept future-dated checks as long as everything else is properly filled out. For what it’s worth, the date on the check actually does mean something as some banks won’t accept checks that bear a date that was more than six months beforehand. Then again, with the ability to deposit checks at ATMs and on your mobile phone, one can’t help but wonder how enforced these rules really are these days (again, speculation on my part).
So postdating isn’t a thing — heartbreaking, isn’t it? Given this reality, it’s in your best interest to ensure that you have the necessary funds in place in the event your subtle request is ignored. Financial advisor Mathew Dahlberg may have put it best, telling NerdWallet, “In short, if you don’t have the money in your checking account, then don’t write the check!”
But… what if it’s too late?
What went wrong
Ever since my first entry of this column, I’ve always been more than happy to share what I’ve been learning and where I’ve gone wrong. In that initial post, I also shared how I had put my days of overdrafts far behind me. Well, my friends, the streak has come to an end.
In my defense, the checks that I’ve been using to pay rent have been from my Discover checking, mostly because I ran out of Wells Fargo checks (my main account) some months back. Since my Discover account is mostly a backup account that I don’t maintain much of a balance in, I hadn’t yet bothered to transfer the money over for rent. Hence my dismay when I woke up to an e-mail from Discover notifying me that my account had been overdrawn with my needlessly postdated check — and, may I add, a bit of hast on the part of my landlord — being the culprit.
Thankfully, I have two saving graces in this case. The first is that Discover actually allowed the check to post instead of bouncing it. Especially with me being out of town, the latter scenario would have been a major headache in this case and could have ended up costing me more due to potential late fees and returned items fees when all was said and done. As for the other lucky break, Discover actually has a “First Fee Forgiveness” program where they’ll waive and credit you for the first eligible fee you incur each year, including overdraft fees. Because of this, it looks like I’ll escape the $30 penalty this time. Phew.
No matter how much I think I know about personal finance, it seems that there are always some nasty surprises waiting for me up ahead (see also: that time I got schooled on 401(k) force outs). In this case, I can say with certainty that I learned some important lessons from the experience, while still managing to make it out relatively unscathed. Hopefully this insight I just gained can help you avoid the same postdating mistakes that I made. Maybe you will even pass on this eye-opening info to your friends, letting my mistake become a pay it forward momentum to help others.