Note: This article is part of our Basic Banking series, designed to provide new savers with the key skills to save smarter.
Even though it’s easy to make payments online, by phone or even your smart watch these days, sometimes you have to dust off your old checkbook. Since paying with a check is less of the norm, the ins and outs of using one are not as well known, including how to cancel a check you no longer want to send.
What happens when you write a check
Once you write a check to an individual or business, there is a processing period before the funds are taken out of your checking account. The process starts when the check you wrote is deposited at a bank or “cashed” by the recipient. That bank will normally make the funds from the check available to the recipient within one business day, even before they go to your bank to get the money. From there, the bank will request the funds from your bank, which it will then withdraw from your account. This time period can vary from one to several business days. During this time, if something goes wrong with your purchase or agreement and you don't want to prevent the funds from withdrawing from your account, your bank does have an option to put a stop on the check.
How to cancel a check or stop payment
Initiating the stop will typically require a call to your bank and providing them with the account info, dollar amount and check number. Many banks also have the option to go through the process online instead of over the phone.
Timing is important when it comes to placing a stop. If you take too long to make the request, your bank may have already paid the check. This means the funds will be withdrawn from your account in the next business day or two. It's best to submit a request to cancel a check as soon as you can.
Fees for cancelling a check or stopping payment
Once you provide the bank with the information to cancel a check, then comes the fee you'll have to pay to process it. The amount varies from bank to bank, and can range from $20-$30 with some banks charging a little less and others a little more.
This may seem like the end of the matter, but there's still more to do. While your bank may have been able to cancel the check, you will likely have to deal with whoever attempted to cash the check. An individual, for example, may find themselves hit with a returned check fee from their bank and possible insufficient funds charges if they used the funds that were made available once the check was deposited. A business can also get hit with fees, which they will try to recover from you along with the funds. If it isn’t rectified, the matter could be taken to court.
Stopping a check can also be a means to prevent fraud. If a checkbook is lost or stolen, you can contact the bank to have them cancel a range of checks. Since this is not stopping an already written check and is more of a precaution, most banks will not charge a fee to cancel these checks.
While it's well within your rights to have a check stopped, there are fees and other potential consequences for doing so. Make sure this is the right step you want to take and that other options have already been exhausted.