Check Expiration and Cancellation Rules You Should Know About
Did you know banks aren't obligated to pay personal checks that are more than six months old? Here's what to keep in mind when it comes to cashing checks.
So you found a personal check from 2011 that you never cashed. Is it too late to deposit it?
It has happened to many of us: A birthday check from Great-Aunt Tilly goes AWOL, only to be found months—or years—later in your junk drawer. When you finally come across it, your first instinct might be to cash it. But bear this in mind: A bank is not required to pay a check that's more than six months old. The Uniform Commercial Code (UCC), tells banks that they are under no obligation to accept personal, or even business checks for that matter if the check is more than 180 days old.
"It's ultimately up to the discretion of each individual bank whether to accept a check," says L. H. Wilson, the senior counsel of the American Bankers Association, in Washington, D.C. When you bring an old check to the bank, you're taking a chance. It could be accepted, rejected, or held until the teller can speak to the person who wrote it.
According to Bankrate, some banks will process old checks if they believe the funds are still available to cover the payment. However, government regulations make clear that banks do not have to deposit a check if they have any doubt about being able to collect the cash from the issuing bank.
It's also worth noting that cashier's checks, (in case you've got one of those stashed away as well) do not necessarily follow the same expiration rules as personal checks. The guidelines are slightly vaguer, as there isn't necessarily a specified expiration date. Often these types of checks are backed by the bank that issued them and as such should be valid as long as the bank is still in business. Still, some banks will include an expiration date on the checks ranging from 60 to 90 or 180 days.
The primary point to remember is that if you've stumbled across an old check made out to you, one of the first steps to take is to reach out to your bank (or in the cash of a cashier's check you might try the issuing bank) and verify the current policy.
Of course, legalities aren't the only concern. Common courtesy matters, too—particularly with personal checks. "When someone writes a check, she expects it to be cashed immediately," says Jeff Stukey, the owner of Stukey Financial Planning, in Wichita, Kansas. After a lot of time has passed, the money may not be available, says Stukey, since many people keep enough in checking for just a month's expenses. By quietly depositing this check, you could accidentally empty the check writer's account. Wouldn't it be awful if your great-aunt's kind gesture were rewarded with a hefty overdraft fee?
Overdraft challenges may not be the only concern when cashing an old check without the knowledge of the person who wrote it. You also run the risk of the account number or routing numbers having been changed over the many months that have elapsed.
If the check is for a small sum (say, $20 or under), you may want to simply chuck it. If it's a larger amount, give the check writer a call and ask if it would still be acceptable to cash it, says Sue Fox, the founder of Etiquette Survival, a professional development company in Pleasanton, Calif.
If the bank then rejects the check, it's fine to call the check writer and ask for a new one to cash. And in the future, remember it's always best practice to cash a check right away to avoid any problems.
And one last note: Be sure to send a thank-you card to the person who wrote you the check as a follow-up. And this time, be quick about it.