When money is withdrawn from your checking account electronically or by check, this is a bank draft. Financial institutions will place a stop payment on either type, usually for a fee. However, the stop payment only lasts for six months. To continue the stop payment for longer, you must renew it for an additional six-month period.
Although procedures can vary between banks, many will allow you to stop payment on a personal check in person, online or by phone. To place the stop payment, provide the check number, date of check, payee name and payment amount. The bank will charge a stop payment fee and issue a receipt for the transaction. This only works if the check has not yet cleared your checking account-- if it has, the stop payment order will be useless.
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A stop payment on a cashier's check is left to the bank's discretion. Some only will do so if the cashier's check has been lost or stolen. Typically, the bank will require you to sign an indemnification agreement as a condition of issuing the stop payment. You also may have to wait a certain period of time after the check was issued, such as 90 days, before it will place a stop payment on it.
When you authorize a third party, such as a merchant or business, to deduct money from your checking account, this is known as an automated clearing house debit or withdrawal, also called an electronic funds transfer or electronic payment. For example, if you join your local gym, the dues deducted from your checking account each month are ACH withdrawals. ACH withdrawals can be one-time deductions or ongoing.
To stop future ACH withdrawals from a particular company, revoke your authorization in writing. If the company has a cancellation form, use it to revoke your authorization. Otherwise, a letter is sufficient. Next, place a stop payment on the item through your bank. The Treasury Department recommends issuing the stop payment order at least three business days before the debit is scheduled to occur. If your gym dues are deducted on the 15th of each month, for example, place a stop payment on the item on the 12th of the month or earlier.
Stop Payment Paperwork
Depending on your financial institution's policy, it may not be enough to verbally request a stop payment. For example, Union Bank requires its customers to complete a stop payment form when stopping an ACH debit, providing such details as the payee's name and payment amount. Some financial institutions, such as the Printing Industries Credit Union, will have you go a step further and designate whether the stop is only for the next ACH debit to the payee, all future ACH debits or ACH debits within a particular time period. Others, like Great Lakes Credit Union, require customers to complete a stop payment form regardless of the type of item being stopped. Generally, the completed stop payment form must be returned within 14 days of any verbal request for stop payment.
If you don't provide adequate information to identify an item or request the stop payment in a timely manner, the bank is not liable if the funds are paid.
If a merchant or business debits your account without your permission, or does so after you have revoked authorization, dispute the transaction. This typically can be done over the phone or in person at your local branch. Provide as many details as you can, including the date and the amount. Your financial institution also may have you complete a written statement of unauthorized activity. Although policies may vary, your bank or credit union typically will research the matter and prevent future deductions from the merchant or business. Depending on the results of the investigation, it also may refund the money.