A post-dated check (or post-dated cheque) is a check written with a future date. In other words, the date that appears on the check is after the date when the check was written. Even with a future date appearing on the check, the check could clear (be paid from) the bank account prior to that date.

They may not have access to credit cards, forcing them to use the services of a local or regional payday loan company. To add further risk, payday loans can be rolled over for additional finance charges. For instance, someone with a car loan can schedule postdated payments to be transferred electronically from their account to the lender. It’s risky to rely on postdating or processing delays to ensure your check clears. Financial institutions now send digital pictures of checks to other financial institutions, so they can be cashed more quickly. This is typically done with the intention that the check recipient will not cash or deposit the check until the future indicated date.

Financial instruments such as money orders and bank drafts cannot be postdated because you must pay for them up front. From the perspective of the check issuer, there should be no journal entry to record the reduction in cash until the date translation exposure listed on the check. From the perspective of the recipient, there should be no entry to record the increase in cash until the date listed on the check. Thus, the date on the check effectively postpones the underlying accounting transaction.

1. That said, if you agreed to wait, cashing the check prematurely might be considered in violation of an oral agreement, and that could be illegal in some jurisdictions.
2. To add further risk, payday loans can be rolled over for additional finance charges.
3. It is used when the issuer wants to delay payment to the recipient, while the recipient may accept it simply because the check represents a firm date on which it will be able to deposit the check.
4. This influences which products we write about and where and how the product appears on a page.

However, a rejected payment (or an unexpected withdrawal from your checking account) can cause numerous problems. If you properly provided instructions to your bank and they pay funds from your account anyway, your bank should be required to cover any overdraft charges that result. You may have further recourse against your bank for any other expenses you face. In some cases, postdated checks get deposited, and nobody ever notices (they don’t look closely at the date). Unless there’s a problem or complaint, those checks are processed and forgotten about.

Cashing a postdated check might be more difficult than depositing it. Depositing allows your bank to place a hold on the funds while the check clears, but cashing a check requires an immediate transaction. If you really want to cash a postdated check for the full amount, take it to the bank that issued the check (where the check writer has a checking account). It’s wise to communicate first with whoever wrote the check—there’s probably a reason it’s postdated. If the account does not have sufficient funds, the check might bounce, and you might have to pay insufficient funds or overdraft fees to your bank. You can try to get those fees reimbursed by the check writer, but collecting from somebody who’s already low on funds can be time-consuming, and if legal action is required, it could be expensive.

What’s the worst that can happen if I postdate a check and it gets cashed?

Banks have different policies for how long they will continue to monitor to prevent premature payment. However, it is illegal to write a check when you know you don’t have the funds to cover it, even if you hope to have the funds later. It is also illegal to pretend to pay someone without actually intending to do so. You’re writing a check to your landlord, but you don’t have enough money in your account. So you date the check a few days in advance — also called postdating it — hoping your paycheck will clear by then.

In this situation, the check is considered a negotiable instrument, irrespective of the date, and it is likely that the recipient will receive cash from the bank prior to the date on the check. In such a situation, it is allowable for the check recipient to record a post dated check upon receipt of the check. If you have the option, it is best to avoid writing postdated checks.

Just because it’s legal to write a postdated check doesn’t mean things will work out the way you intended. The date you choose to use is not part of a legally binding agreement between you and the payee. In most cases, the recipient can deposit the check at any time, and the bank is free to pay funds out of your account before the date shown on your check. Keep in mind, though, that banks and credit unions can cash postdated instruments early. While they may not do so intentionally, there are cases when checks are put through by mistake.

Definition and Examples of a Postdated Check

He receives checks from some renters on the 28th or 29th of the month that are dated for the first of the next month. He suspects his tenants do this to keep him from cashing their rent checks before they’ve been paid, so their rent checks don’t bounce. In banking, a post-dated cheque is a cheque written by the drawer (payer)[1] for a date in the https://www.quick-bookkeeping.net/labor-efficiency-variance-formula-cause/ future. All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional.

Adopted by nearly every state, the UCC is a standard set of business laws that was first published in 1952 to regulate financial contracts. Article 3, Section 113 of the UCC outlines the rules for postdated checks. This section allows financial instruments to be either post or backdated and indicates that the payment cannot be made until the specified date on the instrument. Whether a post-dated cheque may be cashed or deposited before the date written on it depends on the country. A Canadian bank, for example, is not supposed to process a post-dated cheque and if it does so by mistake, the cheque writer may ask their bank to correct the error.

For example, $17.50 per $100 for seven days can translate to a rate of more than 900% on an annualized basis. ABC International receives a $500 check payment from a customer for an unpaid invoice on April 30. ABC should not record the cash receipt until May 15, nor should it reduce the related accounts receivable balance until May 15. Thus, the post dated check has no impact on the financial statements of ABC International until the date listed on the check. Luckily for them, Foster waits to cash postdated checks, but he isn’t legally obligated.

“From a criminal law perspective, there is nothing inherently illegal about postdating a check,” says Eric Hintz, a criminal defense attorney in Sacramento, California. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. We believe everyone should be able to make financial decisions with confidence. (2) A cheque is not invalid by reason only that- (a) it is not dated; (b) it is antedated or post-dated; or (c) the date it bears is a Sunday. When opening a bank account, typically documentation and proof of identity are needed to get the application and review process started.

What Does Postdated Mean?

It is legal for an individual to postdate a check, as well as for a bank to cash or deposit it. Postdated checks are normal checks, but the person writing the check chooses to write a later date on it. While postdating a check won’t guarantee a delay, you can specifically instruct your bank not to cash a certain check until a certain day.

This means that the instrument used to make the payment is dated for a specific date in the future. Banks and credit unions generally state rules about postdated checks in their account disclosures. Some of the biggest banks, for example, note specifically that they can honor checks that are made out for future dates. The term postdated refers to a payment that is meant to be processed on a specified date in the future.