Every year, many cheques go uncashed, according to www.bankrate.com.
“People put a cheque in a drawer or a stack somewhere. Then, the next day, the mail comes and it gets put on top, and it just gets lost,” says Walter Graham, chief of unclaimed property at the Florida Department of Financial Services.
A consumer who comes across one of these uncashed cheques faces a conundrum. While it may be possible to cash a cheque that’s more than six months to a year old, there are several things consumers need to consider before heading to the bank with old cheques.
It’s up to the bank
First things first: There is no hard-and-fast rule about when a cheque becomes expired.
The Uniform Commercial Code, which is a standard set of business laws that governs financial contracts, says that a bank does not have to accept a cheque more than six months old.
Similarly, a bank does not have to deposit a cheque if it has reasonable doubt — such as if the cheque is old — as to whether the paying bank will pay the money.
However, a bank can choose to go ahead and cash that cheque if it feels the cheque is being presented “in good faith.”
“The statute says you’re not required to clear an item. It doesn’t mean you won’t,” says Rob Delaney, president/chief executive officer of Gold Coast Federal Credit Union in West Palm Beach, Florida.
Not so null and void
Even expiration dates written on cheques, such as “void after 90 days,” can be overlooked at the bank’s discretion. “There is no UCC provision that specifically addresses validity of cheque expiration dates,” says Mike Townsend, spokesman for the American Bankers Association.
Graham says many people mistakenly take those “void after” dates as deadlines that are strictly applied when cashing old cheques.
“Some people believe, ‘Oh, my Lord, I waited one week too long and now I lost out on that money,’” Graham says. “Just because I have a cheque that says ‘void’ after a certain amount of days, that money is still owed to me.”
Cash at your peril
However, gambling on whether a bank will accept an old cheque is a risky game. Consider this: Is it worth risking a potential fee if the cheque bounces?
Many banks charge a “deposit item returned” fee to consumers who try to deposit cheques that bounce. That fee varies; consumers could pay some amount, depending on the account and the bank. The banks’ rationale is that the consumers receiving the cheques are in the best position to know whether a cheque is good.
Before trying to deposit an old cheque, consider where it comes from and how likely you think the cheque is to bounce or that the giver has put a stop-payment order on it.
Is that current account of your neighbour likely to still be open or have enough money to cover the cheque? What about that cheque you got from a company for your freelancing work?
If you’re not sure whether the cheque can be cashed, it’s often better to go back to the cheque writer and ask that a new cheque be written.
There are also important etiquette questions when it comes to cashing old cheques, says Jacqueline Whitmore, an etiquette expert and founder of The Protocol School of Palm Beach in Palm Beach, Florida.
By delaying cashing a cheque, the giver may be struggling to balance an account, she says. Or, perhaps the giver has forgotten about the cheque and no longer has enough money in the account to cover the cheque. Cashing it without telling the giver could mean overdrawing that person’s account and forcing him or her to pay overdraft fees.
Whitmore says it’s best to contact the person who wrote the cheque “and say something like, ‘I found a cheque you gave me six months ago. It must have got lost in the shuffle. Is it too late to cash it? I apologise for the inconvenience,’” Whitmore says.
It may feel awkward to make that call, but honesty is the best policy, Delaney says. “A lot of times, the person who wrote the cheque is wondering why you didn’t cash it,” he says. “People may get angry at you because you haven’t cashed a cheque, like it’s insignificant (to you).”
Whitmore says that it’s also all right for the giver to call a cheque recipient and ask whether he or she received a cheque if there’s a delay in the recipient cashing it. She suggests waiting no more than 90 days to make that call.