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Do Checks Expire?

Do Checks Expire?

Among the many terms in banking that leave people confused, one query that puzzles many is about the validity of checks. Here, we will understand the finer nuances of check clearing.
Scholasticus K
In order to understand the working of checks, one needs to take a look at the concept of a 'clearing house'. A clearing house is a place where employees from various banks meet and exchange respective checks that had been deposited with them on the previous day. This process involves two banks namely, the depositing bank and the accepting bank. A depositing bank is the one with whom the check has been deposited by the payee. This bank hands over the check to the accepting bank (sometimes also known as issuing bank), whose check it is and with whom the issuer of the check holds an account. During the exchange process, the code of the check printed at the bottom is used as a guideline. This code is analyzed by both banks, and a check that is a few years old may be withheld by either bank for cross confirmation.

Validity Period

In reality, the expiry of checks is not dependent upon the clearing house or even the banking system. This time period basically depends upon different indices such as crime rate, rate of bank fraud, etc. The process that is followed during the clearing has also become dematerialized and more secure than before. The logical explanation is that higher the rate of crime, lesser is the lifespan of the check. In United States and Europe, a check is usually valid for about six months, however, in case of countries that have a high crime or fraud rate, it may be as less as one month.

Stale Dated Checks
If a check is more than six months old, it can be considered as 'stale dated'. In such a scenario, the bank is not under any obligation to pay it and you may receive a call from them, informing that the check has 'bounced'. On the other hand, some banks may also decide to pay the check if there is no stop payment in effect.

Blank Checks
A blank check without a signature and seal cannot pass the clearing process. A signed check with no amount and date mentioned is still valid if the issuing account is active. However, a blank check does not have any specific time period and expiry date. One must also note that a blank check that is very old (about a few years old), may be considered void by the bank.

Cashier's Checks
A cashier's check is bound to have a small lifespan as it is treated as cash and therefore, has a short validity period. Such a check is often considered to be an instrument frequently exploited by criminals.

Traveler's Checks
A traveler's check, though it comes with a predetermined amount, has the same working as a normal check and would come with an expiry date. A very old traveler's check is often considered to be void even by the issuer's bank.

The best way to avoid expiry is to deposit the check into the bank as soon as you receive it. Also, make sure that every element is filled and truthfully updated by the issuer.