Definition
A postdated check is a personal check written by a consumer that is dated beyond the current date. The purpose is to provide a payment mechanism for a creditor to cash or deposit at a later date.
Analysis
Debt collectors and payday lenders often will request a postdated check from a client in order to hold until payday. Payday lenders will use the check as a loose form of collateral for the loan. Debt collectors will encourage debtors to send in postdated checks to create a payment plan.
Consumers that write postdated checks are engaging in risky behavior, since there are no guarantees that the bearer of a postdated check will wait until payday. Most banks do not even verify the date on the check, which could leave consumers vulnerable to overdraft of their checking account.
