How Long Do You Have to Cash a Cheque in Canada?

How long do you have to cash a cheque in Canada? This question might seem unimportant until you are a payee. Although most people opt for electronic and card payments, others still find it more convenient to write cheques. 

Cheques don’t have an expiry date, but Canadian banks reject cheques over six months old. You can still get your cash after the six-month expiry, but you will go through long and tedious processes. 

If you just received your first cheque, you might be confused about getting the money. Besides the cheque’s expiry, there is more information about this means of payment, like how cheques work and the different types of cheques. This information will increase your confidence around cheques and prepare you for the next one you receive.

Let’s get into the article. 

What Is A Cheque, And How Does It Work?

A cheque is an agreement of payment between two parties. The cheque’s writer, also called the drawer, instructs the bank to deduct money from their account to pay for a debt. When you deposit a cheque into your account, it takes a few days to mature. 

Your bank sends the document to the writer’s bank to ask for payment. However, the bank must first ensure that the cheque is legitimate and there is enough money in the sender’s account. 

Surprisingly, some banks allow the customer to access the money once the other bank confirms it has been received. It takes longer for a cheque from a different bank to mature, but it will take a shorter time if the sender and receiver share the same bank. 

Cheque Holds

The bank will hold the cheque if they suspect risks of losses and fraud in the transaction or insufficient funds in the sender’s account. If your bank holds your cheque, ask if there are alternatives for avoiding the hold in the future.

Also, to avoid the hustle of dealing with cheque depositing and long waits, you can ask your payer to use different means of payment or deposit the money directly into the account. They can also use money transfers to make your money accessible. 

Dealing With an Expired Cheque

Although most people quickly deposit their cheques to access the money, you might get too busy and forget to deposit yours. However, you could, unfortunately, remember it after six months, past the cheque’s expiry date. 

If you happen to forget your cheque until six months later, do not panic. You can ask the sender to write you a new cheque. However, your luck will depend on if the person agrees. 

Suppose the debtor refuses to write a new cheque, or in an event where they have passed away, you will have to take legal action to get the money. This might take you longer and cost more money, which is not worth spending on a small cheque in most cases.

So, how long do I have to cash a cheque in Canada? The truth about cheques is that they have six months’ expiry, but they technically do not expire until six years after they are written. However, this duration depends on the region’s laws. 

How to Avoid Stale Cheques

Dealing with a stale cheque can be tedious and time-consuming, yet you can avoid it. It is even more frustrating if you have many bills piling up and need that money. Hopefully, the following tips will help you avoid the hassle of dealing with stale cheques. 

• Cash the Cheques Immediately Once You Get Them

Depositing the cheque to your account protects you from many problems with the bank. First, you won’t have to deal with expired cheques, and you will get your money in the easiest, fastest way possible. 

Besides, staying with the cheque could lose, stain, or damage the document. Banks do not accept damaged cheques, and you don’t want to ask a stranger to write you a new one, so you should deposit it immediately. 

• Set a Reminder

If you are too busy to deposit the cheque right away, you can set a reminder on your phone or another device to remind you before the expiry date. If your cheque is from an individual, alert the sender on the date you plan to deposit it. It helps to ensure they have enough money in the account so that it doesn’t take long to process. 

• Ask Someone to Deposit It for You

If you cannot access your bank immediately after getting the cheque, you can request the drawer to deposit it into your account. Alternatively, you can send someone you trust to deposit the cheque for you to avoid dealing with a stale cheque. 

• Suggest another Form of Payment

Technology makes it much easier to transact today. If you don’t want to deal with cheques or forget to deposit them, ask the debtor to use another means of payment. 

You might incur exchange fees, but you get the cash almost immediately without worrying about expiry dates. It is best to channel the payments into a savings account to get the benefits of interest payments on the money in the future.

Other Important Cheque Terms to Know

Besides cheques expiry, it is essential to know different terms around cheques. The other common ones are;

• Non-Sufficient Funds and Stop Payments

To discourage people from writing cheques with insufficient funds in their accounts, the bank charges a non-sufficient funds fee (NSF). You will also pay a chargeback fee and interest to the bank in many cases, especially if the balance of the account remains overdrawn. 

Before drawing a cheque, always ensure you have enough money to avoid cheque bounces.

• Lost or Stolen Cheques

If you lose your cheque or someone steals it, you should stop payments to ensure the money doesn’t land in the unintended hands. However, check if your bank provides a stop payment service for free because some banks will ask you to pay a fee for the service. 

When stopping payments, the bank will ask for your cheque number, the amount on the cheque, and the recipient’s name. You should also give out the date written on the cheque. 

If the recipient has not cashed the cheque yet, the bank will take some time to stop the payment. However, the process might not go through if you give the wrong information on the amount, date on the cheque, and the receiver. 

You could alternatively ask the person you wrote the cheque to if they can refund the money. Also, check all the terms and conditions of your bank before beginning the stop payment process. Some charge the customers a fee if the process fails to go through. 

• Post-Dated Cheques

You can write a cheque and indicate the date you want the receiver to cash it. Until then, the money should remain in your account. If the bank finances the payee earlier than indicated on the cheque, you can ask them to return the funds into your account. However, ensure you do so before the date stated. 

• Counter-Signed Cheques

Another person other than the indicated one can cash out the cheque. This happens if you lose it or it lands on other hands. To ensure no other person can deposit your cheque, write “for deposit only to account of payee” at the back of the document. 

The bank will not allow another person to cash it but the indicated recipient. Also, if you stop payment without informing the receiver, they can take legal action against you. You should have a valid reason before cancelling the transaction. 

Final Words

Before receiving a cheque, you can research “how long do you have to cash a cheque in Canada.” Knowing the duration ensures you won’t suffer the consequences of a stale cheque. And did you also know that you can cash a cheque without a bank account? Hopefully, this more information about cheques will help you.