Postdated

What's the significance here?

The term postdated alludes to a payment that is meant to be handled on a predefined date from now on. Individuals can postdate several types of payment methods, including checks and electronic payments. Payments might be postdated in a number of conditions, including in the event that somebody sets up a payment arrangement with a creditor or when there are customary regularly scheduled payments set to emerge from a account. Postdated payments can't be removed from an account until the date determined.

How Postdating Works

Giving payment to goods and services front and center is customary. However, at times, the payer may give the payee with a postdated payment. This means that the instrument used to make the payment is dated for a specific date from now on. This should be possible utilizing several payment methods, including checks.

By composing a date later on a check, the payer demonstrates that they don't believe the payee should cash the check until that date. They may likewise remember a note for the update line showing that it is a postdated check. For instance, in the event that Mike composes a check on the Jan. 14, however postdates it for Jan. 28, the bank will not (or shouldn't) cash the check for an additional fourteen days.

Postdated payments can be made involving electronic methods also. For example, somebody with a vehicle loan can schedule postdated payments to be transferred electronically from their account to the lender.

Financial instruments, for example, money orders and bank drafts can't be postdated on the grounds that you must pay for them front and center.

Postdated payments can be utilized in light of multiple factors. For instance:

• An individual might compose a postdated check when they need more funds in their account, in this manner keeping away from a non-adequate funds (NSF) charge
• A tenant can give their landlord with postdated checks for the rent when they move in to stay away from late charges in the event that they neglect to pay
• Somebody might offer postdated payments when they owe money to another individual or company

Special Considerations

The Uniform Commercial Code (UCC) empowers lenders to loan money, secured by a borrower's personal property. Adopted by virtually every state, the UCC is a standard set of business laws that was first distributed in 1952 to regulate financial contracts. Article 3, Section 113 of the UCC frames the rules for postdated checks. This section allows financial instruments to be either post or backdated and shows that the payment can't be made until the predefined date on the instrument.

Keep as a top priority, however, that banks and credit unions can cash postdated instruments early. While they may not do so intentionally, there are situations when checks are put through accidentally. For example, a teller may not notice the date on the check and cycle it that day. Or on the other hand an individual might deposit a check through the automated teller machine (ATM). Assuming the check goes through and bobs, the payer might be responsible for a NSF charge.

Postdated Checks and Payday Loans

Payday loans customers every now and again utilize postdated checks to repay their lenders. These are risky, short-term loans. An individual gets a small amount (normally $100 to $1,500) at an extremely high rate of interest. For instance, $17.50 per $100 for seven days can translate to a rate of over 900% on a annualized basis.

A payday borrower normally composes the lender a postdated personal check for the amount of the loan plus a fee. The lender cashes the borrower's check on the settled upon date, for the most part on the borrower's next payday.

Most payday loan borrowers have [poor credit](/terrible credit) and low wages. They might not approach credit cards, driving them to utilize the services of a neighborhood or regional payday loan company. To add further risk, payday loans can be turned over for extra finance charges.

Risks of Postdating

Since a delay exists between when a person composes a postdated check and when a banker cashes it, sensitive data can stay uncovered and helpless for days, weeks, or even a month. The opportunity for identity theft is high. Identity theft happens when somebody acquires personal or financial data of someone else to expect that person's identity to make transactions or purchases.

Highlights

• Postdated alludes to a payment that is meant to be handled on a predetermined date from here on out.
• You can postdate financial instruments, for example, checks or you can postdate electronic payments.
• Postdated payment instruments are covered under the Uniform Commercial Code, which has been adopted by practically every state.
• In spite of the fact that postdated payments can't be cashed until the date determined, financial institutions might do as such prior to that date.