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How to Write a Cancelled Cheque: A Comprehensive Guide

February 29, 2024 3:37 pm EST

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Writing a cancelled cheque may seem like a simple task, but it is essential to understand the correct procedure to avoid any confusion or complications. Whether you need to provide a cancelled cheque for setting up automatic payments, verifying your bank account details, or any other financial transaction, this article will guide you through the process step by step. By the end, you will have a clear understanding of how to write a cancelled cheque and why it is necessary.

What is a Cancelled Cheque?

A cancelled cheque is a cheque that has been marked as “cancelled” by the account holder. It is used as a proof of ownership of the bank account and provides important information such as the account number, account holder’s name, and bank details. While the cheque itself cannot be used for any financial transaction, it serves as a document to verify the account details.

Why Do You Need a Cancelled Cheque?

There are several situations where you may be required to provide a cancelled cheque:

Setting up automatic payments: Many organizations, such as utility companies, insurance providers, and loan agencies, require a cancelled cheque to set up automatic payments from your bank account.
Verifying bank account details: When applying for various financial services, such as loans, credit cards, or investment accounts, you may need to provide a cancelled cheque to verify your bank account details.
Direct deposit: If you receive payments from your employer or government benefits directly into your bank account, they may ask for a cancelled cheque to ensure accurate deposit information.

Step-by-Step Guide to Writing a Cancelled Cheque

Follow these steps to write a cancelled cheque correctly:

Step 1: Gather the Required Materials

Before you start writing a cancelled cheque, make sure you have the following materials:

A blank cheque from your bank account
A pen with permanent ink

Step 2: Fill in the Date

Start by filling in the date on the cheque. Write the current date in the designated space provided on the cheque. Make sure the date is legible and accurate.

Step 3: Write the Payee’s Name

In the “Pay” or “Pay to the Order of” field, write the word “CANCELLED” or “VOID” in capital letters. This indicates that the cheque is cancelled and cannot be used for any financial transaction. Make sure to write it clearly and boldly to avoid any confusion.

Step 4: Cross Out the Bearer Word

On the cheque, you will find the word “Bearer” or “Or Bearer” mentioned. Cross out this word with a diagonal line. This ensures that the cheque can only be deposited into the account of the payee mentioned.

Step 5: Sign the Cheque

Sign the cheque in the designated space provided. Use the same signature that you use for your regular cheques. This signature will help verify that the cheque belongs to you and is cancelled by your consent.

Step 6: Tear the Cheque

Once you have completed all the necessary steps, tear the cheque into multiple pieces. Make sure to tear it in a way that renders it unusable. This prevents anyone from misusing the cheque or attempting to deposit it.

Common Mistakes to Avoid

While writing a cancelled cheque, it is important to avoid certain mistakes to ensure its validity and effectiveness:

Using a cheque that is not from your own bank account: Always use a blank cheque from your own bank account to write a cancelled cheque. Using a cheque from another account may lead to confusion and rejection.
Not crossing out the bearer word: Crossing out the bearer word is crucial to restrict the cheque’s use to the intended payee. Failing to do so may result in the cheque being treated as a regular cheque.
Not tearing the cheque properly: Ensure that the cheque is torn into multiple pieces, making it impossible to reconstruct. This prevents any unauthorized use or attempts to deposit the cheque.

Q&A

Q1: Can I use a cancelled cheque for a financial transaction?

No, a cancelled cheque cannot be used for any financial transaction. It is marked as “cancelled” to indicate that it is void and cannot be used as a valid payment instrument.

Q2: Can I use a photocopy of a cancelled cheque?

In most cases, a photocopy of a cancelled cheque is acceptable. However, it is always recommended to check with the specific organization or institution requesting the cancelled cheque to ensure their requirements are met.

Q3: How long is a cancelled cheque valid?

A cancelled cheque does not have an expiration date. However, it is advisable to provide a recent cancelled cheque, preferably issued within the last three months, to ensure the accuracy of the account details.

Q4: Can I use a cancelled cheque for multiple purposes?

Yes, you can use a cancelled cheque for multiple purposes as long as the required information is clearly visible and legible. However, it is always recommended to provide a separate cancelled cheque for each specific purpose to avoid any confusion.

Q5: Can I cancel a cheque that has already been issued?

No, once a cheque has been issued, it cannot be cancelled. However, you can contact your bank and request a stop payment on the cheque to prevent it from being cashed or deposited.

Summary

Writing a cancelled cheque is a simple yet important task that may be required in various financial situations. By following the step-by-step guide provided in this article, you can ensure that your cancelled cheque is correctly written and serves its intended purpose. Remember to use a blank cheque from your own bank account, cross out the bearer word, sign the cheque, and tear it into multiple pieces. Avoid common mistakes and always provide a recent cancelled cheque for accuracy. Now that you have a comprehensive understanding of how to write a cancelled cheque, you can confidently fulfill any requirements that may arise.