What term describes a check written hoping to deposit funds before it clears?

The term that describes a check written with the expectation that funds will be deposited before it clears is known as a floating check. A floating check is typically issued when the writer anticipates that they will have enough funds in their account by the time the check is presented for payment. This practice, however, can be risky, as it relies on the timing of deposits and withdrawals, which may not always align as anticipated.

This concept is important in banking and finance as it highlights the potential for check float, where the issuer delays the actual payment date by writing a check when they do not have sufficient available balance. It can lead to overdraft fees or bounced checks if the funds are not deposited in time to cover the amount when it is processed. Understanding the risk associated with floating checks helps individuals manage their finances more effectively and avoid potential banking penalties.