What Is the Definition of a Dishonored Check?

What Is the Definition of a Dishonored Check?

What Is the Definition of a Dishonored Check?

A dishonored check is defined as a check that has been presented to a banking institution for payment and has been returned to the depositor due to insufficient funds. Dishonored checks are also referred to as bounced checks or returned checks.

Dishonored checks occur for a variety of reasons. In many cases, an individual simply miscalculates his checking account balance and unknowingly writes a check for an amount that exceeds the balance. Alternatively, there are also cases in which an individual intentionally attempts to cash a bad check in order to receive cash that is not rightfully his. Many banks provide customers with what is known as a "shadow balance," a secret line of credit that is determined by the bank that allows for payment of over-drafted checks at the bank's discretion.