What are post-dated checks?
Posted on Wednesday, November 18th, 2009 at 7:24 pm in Financial Planning
A postdated check refers to the one that you have written with a future date on it with the intention that it can be cashed by the collector only on that date and not before it. These kinds of checks, also called Cash advances are often used in colligation with Payday Loans. However, a postdated check does not legally entitle the bank to pay cash on demand. In many countries, like in the USA and the UK, a postdated check can be cashed before the due date.
People write Cash advances for various reasons. Assume that your account does not have the money to be paid until that date or you are going out of station and you need to pay someone during that time. In such cases, paying by postdated checks would be one of the most viable options for you. And in most cases, it is not illegal, unless of course, one does not have any illegal intentions in mind. But if you are the payee of Payday Loans it is advisable not to pay in postdated checks without knowing the alternatives to payday loans.
In case you write a Cash advance, it is always advisable to let your payee know about it and also inform your bank to avoid any legal hassles later. To protect your account, go to your bank and give them a reasonable notice about the identity of your account. Let them know the date, check number, name and account number of your payee. Fill out a bank form if required. This will put you in a safer position, in case the check is cashed before the due date.
In case you are the receiver of a Cash advance, be sure to accept it only from trustworthy customers. If the source is not authenticated, there could be problems like insufficient money or closure of the account before due date. Then, little chances would be there to recover your funds. As Cash advances are not covered in bad check laws of most states and does not guaranty pay on demand, there is a considerable risk in accepting postdated checks.
In case your check has been cashed by the bank prior to the due date even after giving notice to the bank, there is some chance to reclaim the damage partly. And in case you are not able to cash an instant Cash advance made in your name, it is advisable to consult your lawyer to check if your state provides any legal path to reclaim the amount. In case of suspected fraud, file a report with the local police.
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