Top Reasons Banks Won’t Cash Your Check

We may be moving toward a cashless society, but we’re not there yet. Despite the growth of electronic payments, debit cards, and credit cards, checks are still widely used in the United States. More than 14 billion paper checks were issued in 2018 alone, according to a Federal Reserve report.

While writing a check is quite simple, cashing one can be a chore. if you’re heading into a bank or credit union with your check, it’s important to be prepared. To avoid any problems, review these top reasons a bank may not cash your check.

Key Takeaways

  • You will need a government-issued photo ID when cashing a check.
  • If the check is made payable to your business, make sure you have a business account at the bank and that the business is properly registered with the state.
  • Banks may require advance notice to cash large checks.
  • Checks can be difficult to cash if they’re “stale-dated.”2

You Don’t Have an Account There

A bank is not obligated by law to cash a check for you if neither you nor the writer of the check has an account with that bank.

If the check was written by someone with an account at that bank, the bank may honor the check assuming there’s enough money in the account.

You Don’t Have Proper ID

Banks have to protect themselves against check fraud. Without proper proof of identity, a bank can legally refuse to cash a check made out to your name.

Always carry proper government-issued identification such as a driver’s license or passport when you intend to cash a check. The bank may demand that these proofs be “valid,” or current, even though your picture is right on it.

In some states, banks are allowed to swipe the magnetic stripe of the driver’s license or identification card issued by the Department of Motor Vehicles as a requirement to cash a check, as long as they stay within the legal limitations of what they can do with that information.

The Check Is Made to a Business Name

Say a business owner wants to cash a check written to the business. For example, John Smith, owner of John Smith Landscaping Services LLC, wants to cash a payment from a customer.

That may seem harmless enough, but it might not be cashable if the owner has not followed through with a few simple—and necessary—procedures.

John just finished a large job and receives a check made to John Smith Landscaping Services LLC. He tries to cash that check at a nearby bank, but the bank teller refuses to complete the transaction unless John can provide proof of valid business registration with the state.

Business owners need to take two steps to prevent the problem:

  • Complete the registration of the business with the state government. The limited liability company (LLC) is the most common type of state business registration. Others include corporations, nonprofit organizations, and partnerships.
  • Open a business account at the bank under the business name.

Both these steps are needed for other purposes, notably for tax filing, but they’ll also save aggravation at the bank.

If you don’t have an account at that bank, you may be charged a check-cashing fee, especially if you go to the payor’s bank.

Large Transactions

Not all bank branches can handle a large cash transaction without advance notice. Credit unions and smaller branches of large national bank chains may not have the necessary cash on-site to clear a very large check. 

For example, a bank may routinely keep $50,000 available per day for customer transactions. It will not be willing to hand most or all of it to a single customer and tell the next customer that the bank is out of cash.

When you have a check for a very large amount of money, call ahead to the manager of the bank branch you intend to visit. The bank manager will advise you whether you should go in by appointment, go to the main branch, or even go to another bank that can handle the transaction.

Stale Checks

Some checks carry notices indicating that they will become void after a certain period of time. Once that date has passed, these checks are referred to as stale dated.

Some checks can become stale-dated as early as 60 days, while others may be 90 to 180 days. While the Federal Reserve considers those notices to be guidelines, some banks are very conservative and won’t budge.

If you wait too long to cash a check, a bank can refuse to cash it. Legally, a bank can refuse to cash any check that is older than six months. Some banks may decide to cash it anyway as a favor to a long-time customer, but that is entirely at the bank’s discretion.

Another reason a bank may not be able to cash a check that is too old is that the routing number of the institution issuing the check may have changed as a result of a merger or acquisition.

Hold Payment Requests

If you try to cash a post-dated check (one with a future date on it) and a bank refuses to cash it, the bank may be following instructions from the person who wrote the check. 

When someone gives advanced written notice to your bank to not cash a post-dated check, the request is valid for six months under state law. An oral notice is valid for only 14 days. Banks are obligated to follow these requests from their clients strictly.

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