When you lose a check or for some other reason do not wish your bank to honor it, you can place a stop payment on it. Stop payments are designed to prevent people from cashing checks, but in certain situations someone may manage to cash a check even if you place a stop payment on it.
You must pay a fee to place a stop payment on a check, and this fee often exceeds $20. However, many people happily pay this fee because they feel paying it will prevent anyone from cashing one of their outstanding checks. However, stop payments, like all bank transactions only take effect after the bank processes all of the day's transactions. Some banks may send out electronic alerts at the time you place the stop payment to notify tellers about the stop payment, but generally a stop payment does not take effect for at least 24 hours. Therefore, someone could conceivably cash the check on the day you placed the stop payment.
When you place a stop payment you place it at the bank that holds the account, and the teller's check scanners at the bank will recognize the check if anyone attempts to cash it. You could cash the check at another bank as the employees of that bank would have no idea that a stop payment had been placed. However, when you cash a check drawn against another bank, your bank can debit your account for the money that you receive if the paying bank returns it because a stop payment had been placed on it. Therefore, if you cash a stopped check you end up having to repay the money to your bank.
When you place a stop payment you have to provide your bank with the check number, the name of the person that you wrote the check to, the date on the check and the amount of the check. If you cannot remember all of the details, or if you accidentally give your bank the wrong check number, your bank may end up cashing the check that you intended to stop. Banks are not liable for losses that you incur due to providing inaccurate or incorrect information.
A stop payment only remains in effect for six months. Generally, banks do not cash checks that are more than six months old because such checks are classified as being "stale dated." The Uniform Commercial code states that banks do not have to honor stale dated checks. However, while banks typically do not honor stale dated checks, nothing prevents a bank or a bank employee from deciding to honor such an item. In theory someone could cash a check after the stop payment has expired. Additionally, stop payments only remain in effect for six months if you make the stop payment request in writing. Verbally placed stop payments requests are only valid for 14 days.
- Comptroller of the Currency Administrator of National Banks: Answers About Stop Payment Orders
- Bankers Online; When is a Check Considered Stale Dated?; Ken Golliher; May 2005
- Bankrate.com; How a Stop Payment Works; Don Taylor; December 2004
- Bankrate.com; Stopping a Check Payment is Expensive; Laura Bruce; July 2005