Rubber check definition
/What is a Rubber Check?
A rubber check is a check that has been rejected by the bank on which it was drawn. This situation arises when the maker did not have sufficient funds in the underlying account to cover the amount of the check. A rubber check is a sign of poor cash management by the maker. When this situation occurs, the bank will likely charge a fee to the maker. If the maker has an overdraft protection agreement with its bank, then the bank will lend the shortfall to the maker, so that no checks will bounce.
Example of a Rubber Check
Sally writes a check for $200 payable to Henry, despite having only $150 in her bank account. Henry cashes the check, not knowing that there is insufficient cash in her account to support the check payment. The bank rejects the check and charges Sally a $30 not sufficient funds fee. She still owes Henry the $200.
Terms Similar to a Rubber Check
A rubber check is also called a bounced check .
