The cancelled check is a check that has the word “CANCELLED” written across its face, indicating that it should not be accepted for payment. The cancelled check can still be used to obtain the necessary information for electronic payments.
How does a cancelled check work?
The cancelled check contains the word “CANCELLED” written across its face. It is usually written in capital letters to avoid any chance of it being used accidentally.
Canceling the check “disables” it so that it cannot be used as a blank check. In other words, a thief who steals a cancelled check cannot write the check to themselves and enter a large amount and sign it.
Example of a cancelled check
For example, if your company’s payroll department needs a check from you to set up direct deposit, you can provide a cancelled check. This way, they know that no one will be able to alter the check and cash it, as it has been cancelled.
The cancelled check is most often used to provide banking information so that someone can set up an electronic link with your bank account, such as direct deposit for your salary. You are asked to provide a cancelled check because it contains many details about your bank and account printed on it:
- Your bank’s address (or the credit union you use)
- Your bank account number
- A code that identifies your bank (called the “routing number”)
Those numbers printed in magnetic ink at the bottom of the check provide everything needed to deposit or withdraw funds.
Requirements for a cancelled check
The cancelled check must have the word “CANCELLED” written on it. When you submit a cancelled check, the recipient copies your banking information from it and enters it into their systems. Ideally, the check will then be shredded so that no one else can access that information.
Most businesses do not even require the original; a copy of the cancelled check is sufficient.
Alternatives to a cancelled check
A check (or a picture of it) may not be the only way to set up electronic payments. Companies usually request a printed document because:
- It reduces the chances of error
- It reduces the chances of fraud
Consumers often provide their own routing and account numbers online without any problem, so cancelled checks are requested less frequently. For example, online banks allow you to link external accounts by entering those details yourself. Billing companies, like utility companies, also accept payments via electronic checks when customers enter their banking information. Some companies even accept payments over the phone, allowing customers to provide information verbally.
If you do not have a cancelled check in your possession, there are several other options:
- Ask your bank for a “counter check,” which is a check that is printed on demand by the branch. Banks usually charge a small fee for counter checks.
- Check if a pre-printed deposit slip for a checking or savings account is acceptable.
- Find out if a letter from your bank is acceptable.
Frequently Asked Questions (FAQs)
How can I get a cancelled check for direct deposit? If you need a cancelled check to set up direct deposit with your employer, you have two options. You can take a check from your checkbook and write “CANCELLED” across it in capital letters and submit the check to your employer. If you do not have a check to provide, ask if you can submit a counter check, a copy of a deposit slip, or a letter from your bank. You may also be able to provide your routing and account numbers directly.
Why do employers need a cancelled check? Employers typically request a cancelled check as a simple way to collect your banking information for direct deposit. By using the routing and account numbers from your cancelled check, the employer can arrange to deposit your paycheck directly into your account on payday, saving you time and hassle.
Source:
https://www.thebalancemoney.com/what-is-a-voided-check-315083
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