What happens if there are insufficient funds in my checking account when a cheque is deposited?
In my question, there are two accounts involved. I will call the account where funds are being taken from (debited) Account A and the account where the cheque deposit happens Account B.
Question: At the bottom of the front side of the cheque is the banking info for Account A, which is a Checking account. What happens if Account A has insufficient funds at the time when money should be taken from that account? Because there is banking info of only one account on the front side of cheque, there is no way that remaining funds could be automatically taken from other checking accounts (if any). The only solution I see here is to make sure to transfer funds from other accounts (either checking or savings or whatever) to Account A via the “Internal Own Account Money Transfer” feature BEFORE the funds are taken, but are there any other options?
First, there are not necessarily two accounts involved. Usually the receiving party can take the check to the bank on which it is drawn and receive cash. In this case, there is only one bank, it can look to see that the account on which the check is drawn has sufficient funds, and make an (essentially irrevocable) decision to pay the bearer. (Essentially irrevocable precisely because the bearer did not necessarily have to present account information.)
The more usual case is that the receiving party deposits the check into an account at their own bank. The receiving party’s bank then (directly or indirectly – in the US via the Federal Reserve) presents the check to the paying party’s bank. At that point if the there are insufficient funds, the check “bounces” and the receiving party’s account will be debited. The receiving party’s bank knows that account number because, in this case, the receiving party is a customer of the bank. This is why funds from check deposits are typically not available for immediate withdrawal.