A canceled check is a check that has been processed and cleared by the issuing bank to prevent future use.
Often confused with stop payment requests and returned checks, canceled checks are distinctly different. Gain a complete understanding of how they work and why you may need to request one down the road.
Definition and Examples of Canceled Checks
Canceled checks are checks that have already been successfully processed, meaning the money has been deducted from the associated checking account. These checks are deemed canceled by the issuing bank because the transaction is complete and they should not be processed again.
For example, say you write and send a check for $500 to your cousin Johnny for a fundraiser he’s running. He receives your check and deposits it to his bank using his cellphone. His bank may then send the check to your bank, a local clearinghouse exchange, or one of the Federal Reserve’s correspondent institutions that provide check-collection services. All of these organizations serve the same purpose—to deduct the money from your account and deposit it into Johnny’s.
Once the check clears and the money is transferred from you to Johnny, the check is canceled by your bank. While paper checks were once physically sent back to the issuing bank to be canceled, a digital image of the front and back of the check is now the most common method of documentation.
Paper checks have declined largely with the advancement of digital banking and the 2004 establishment of the Check 21 Law, which enables banks to handle checks electronically in order to improve efficiency. In fact, Reserve Banks reduced the number of paper check processing locations from 45 in 2003 to one in 2010.
How a Canceled Check Works
Once your bank clears a check, whether physical or electronic, it marks the check as canceled. From there, banks are not required to send you canceled checks or copies of them. However, some may provide a “substitute check”—a paper copy of the front and back of your original check—as part of their agreements with account holders.
So what if your bank doesn’t send you your canceled checks but you need one or more of them? In that case, you would need to contact your bank to request them.
You may be able to view and print your checks online or order paper copies in the mail. Bank policies can vary on how long they keep canceled checks, but most state laws require banks to keep copies of checks for up to seven years.
Because canceled checks confirm a transaction was completed, they can serve as proof of payment and may be required for tax purposes, divorce settlements, child support, or other required expenses.
Canceled Check Fees
While canceled checks themselves do not come with any fees, you can run into fees when you order copies of them from your bank. For example, Bank of America doesn’t charge for the first two check copies of each request, but then it charges $3 for each copy up to $75 per request. These fees vary by institution and can often be avoided by viewing and printing canceled checks online.
Canceled Checks vs. Returned Checks
Returned checks are checks that are not processed because the issuing bank does not pay them. This can happen for a variety of reasons, such as insufficient funds or a missing signature. If your check gets returned, you’ll often have to pay a fee.
Canceled checks are ones in which the money is deducted from the checking account and processed successfully. They are marked canceled by the bank so that they are not processed again.
Canceled Checks vs. Stop Payment Requests
If you have written a check but want to halt its processing, you can issue a stop payment request. After doing so, the check will be flagged so that if someone tries to cash it, it will be denied. You may need to order a stop payment if, for example, you lost the check before sending it. This is different from a canceled check, which is marked “canceled” upon completion to prevent duplication.
- Canceled checks are checks that have been processed, cleared, and marked “canceled” to prevent double processing.
- Your bank is not required to send you your canceled checks.
- Some states require banks and credit unions to keep copies of canceled checks on file for up to seven years.
- Canceled checks are different from returned checks or stop payment requests.