Have you ever received a cheque that’s past its expiry date or dated for the future? It can be confusing to know what to do with it, and even more so if you’re not sure of the difference between a stale cheque and a post-dated one.
A stale cheque is a cheque that has not been cashed or deposited within a certain period and is no longer valid or guaranteed by the bank. While a post-dated cheque is a cheque that has a future date on it, meaning it cannot be cashed or deposited until that date has passed.
Stale vs. Post-Dated Cheque
| Stale Cheque | Post-Dated Cheque |
|---|---|
| A stale cheque is a cheque that has not been cashed or deposited within a certain period and is no longer valid or guaranteed by the bank. | A post-dated cheque is a cheque that has a future date on it, meaning it cannot be cashed or deposited until that date has passed. |
| They are issued with a current date but are not cashed or deposited within a certain period, typically six months or a year, depending on the jurisdiction. | They are issued with a future date and cannot be cashed or deposited until that date has passed. |
| Stale cheques are no longer valid after a certain period, typically six months or a year, depending on the jurisdiction, and may be returned or dishonored by the bank. | Post-dated cheques are only valid on or after the date indicated on the cheque, and may be returned or dishonored if presented before that date. |
| It may occur accidentally or intentionally, but they are generally the result of a delay in depositing or cashing a cheque, or a lack of attention to financial records. | They are typically used to delay payment until a certain date, such as to pay rent or bills at a future date. |
| Stale cheques carry the risk of being returned or dishonored by the bank, resulting in late fees, bounced cheque fees, and damage to credit ratings. | Post-dated cheques carry the risk of insufficient funds or the cheque bouncing when presented on or after the future date, resulting in fees and damage to credit ratings. |
| It may incur fees from both the issuer and the recipient, such as late fees or bounced cheque fees. | It may also incur fees from both the issuer and the recipient, such as insufficient funds fees or bounced cheque fees. |
| Stale cheques should be destroyed or voided to prevent accidental or intentional misuse, and financial records should be regularly reviewed to identify stale cheques. | Post-dated cheques should be carefully monitored and recorded to ensure they are deposited or cashed on or after the future date indicated on the cheque |
What is stale cheque and post-dated cheque?
A stale cheque is a cheque that is older than six months. If you deposit or cash a stale cheque, the bank may refuse to honor it. If you deposit or cash a post-dated cheque before the date on the cheque, the bank may refuse to honor it.
A post-dated cheque is a cheque that is dated for a future date. The payee can present the cheque on or after the date indicated, and the funds will not be drawn from the account until that date.
Pros and cons of using stale or post-dated cheques
On the plus side, using a stale cheque can be a way to get around bounced cheque fees if the payee knows that the cheque will not clear right away.
Post-dated cheques can also be used to ensure that payments are not made until a later date, which can be helpful in managing cash flow.
On the downside, however, using stale or post-dated cheques can create confusion and may result in legal complications if not handled properly.
When to use a stale or post-dated cheque
1. To buy something from a person or business that does not accept credit cards
2. To get around the limit on how much cash you can withdraw from your bank account in a day
Similarities between stale and post-dated cheques
- Limitations on cashing or depositing: Stale cheques are cheques that are not cashed or deposited within a certain timeframe, usually six months after the date on the cheque. Post-dated cheques are cheques that are dated in the future, and cannot be cashed or deposited until the date written on the cheque. Both types of cheques have limitations on when they can be cashed or deposited.
- Risk of non-payment: Both stale and post-dated cheques carry a risk of non-payment. A stale cheque may be returned by the bank due to insufficient funds, while a post-dated cheque may bounce if the funds are not available on the specified date.
- Legal implications: Both stale and post-dated cheques have legal implications. Banks may refuse to accept stale cheques, and post-dated cheques may be illegal in some jurisdictions if they are used to evade debt or for other fraudulent purposes.
Key differences between stale and post-dated cheques
- Timing of limitations: Stale cheques are cheques that have not been cashed or deposited within a specific timeframe, usually six months after the date on the cheque. Post-dated cheques, on the other hand, have a future date on them and cannot be cashed or deposited until that date.
- Intentions of the cheque holder: The purpose of post-dated cheques is to delay the payment until a future date, while stale cheques are a result of the cheque not being cashed or deposited in a timely manner.
- Legal considerations: Stale cheques may be refused by banks, while post-dated cheques are often accepted by banks, but they can be dishonored if there are insufficient funds when presented. In some jurisdictions, post-dating a cheque with the intent to defraud or evade a debt is illegal.
- Accountability: The accountability for a stale cheque falls on the issuer, as the cheque has already been written and provided to the payee. In contrast, post-dated cheques give more accountability to the payee, as the issuer has not yet provided the funds and has the option to cancel the cheque before the future date.
