Three Things You Must Know About Bounced Check Fees On Payday Loans Debt
The payday loans debt starts growing very fast with unexpected high amount of extra costs when the checks used by the borrower to obtain loan bounce. It happens when the bank account of the borrower does not have sufficient fund to honor the checks. Many consumers who are not aware of its consequences often wonder to see their debt growing so fast within a very short span of time. Following are the three things you must know about how bounced checks can seriously affect your finances.
Both Banks And Lenders Charge Certain Fees
If a bank dishonors a check because of insufficient fund in your account, you will be charged a penalty. The bounced check fee charged by banks is usually somewhere between $20 and $35. The lender who you owe to will also charge you a hefty amount of penalty every time a check is dishonored and returned unpaid. The bounced check fee charged by lenders may vary significantly from one lender to another. The fee also depends on state laws, but again, not all states have laws regarding this.
How Many Times The Same Check Can Be Presented For Payment?
The industry self-regulatory rules are applicable to all lenders including banks and payday lending companies. As per these rules, once a bank returns a check unpaid due to insufficient fund, the lender can resend the check again for payment the next month. If the check is dishonored again, the lender can present it for payment for a third time. But, it is important to note that the same check cannot be presented for payments more than three times. You have the right to file a complaint at your bank or the FTC (Federal Trade Commission) office in case you see more than three attempts to collect payments on the same check. Still, three times bouncing of checks will result in three times bounced fees both from your bank and from your lender, which can result in a substantial increase in your overall payday loans debt.
What If You Close Your Bank Account?
If you close your bank account without making the repayment in full and without notifying the lender about it in an attempt to avoid the bounced check fees, it will be considered as a case of forgery and your lender may charge a civil lawsuit against you. In fact, many payday lending companies have a specific provision in the loan agreement, as per which, you must keep your bank account open until the loan is repaid in full. In that case, the bank will not close you account and the penalties will keep on adding to your debt.
Overall, if you know that your bank account does not have sufficient fund and the checks are going to be bounced, you must talk to your lender and negotiate an alternative repayment plan. If that does not work, you can try other alternatives, such as taking advance from your employer or borrowing a low-rate loan from a credit union, to make the repayment of payday loans debt in full. The idea is to get that payday loan account closed as soon as possible. The longer it remains open, the deeper your will keep on becoming.