A Stale Check is defined as a check that is presented to the bank after a considerable amount of time from the date that has been mentioned on the check. The date timeline in this regard is mostly of a duration of 6 months or more.
While the bank might not always refuse to accept the stale check, yet it is often a cause of concern for the bank because it tends to be inconsistent because of the delay in the time period from when the check was issued, and when it was presented to the bank to be honored.
In simpler terminology, it can be seen that stale check is a check that is presented to the bank after 6 months of the date when the check was initially issued.
Stale Checks are often a cause of a suspicion when it comes to the bank, and therefore, many countries have the rule that banks are not always obliged to honor such checks, and they can refuse to accept it on grounds of irregularity and suspicion.
In this regard, banks are a holistic term that is used to define commercial banks, as well as other financial institutions that include checking accounts, savings accounts, loans, as well as credit unions.
The concept of stale checks does not only apply to personal banking accounts, but might also apply to business accounts. To further explain this concept, the following example can be used:
A company, Gen X Co. issued checks against inventory purchases from ABC Co. in January 2018. However, due to some reason, ABC Co. did not present these checks at the bank until 30th June 2018.
When the accountant found out that these checks had not been deposited in the bank, he sent them out to the bank to be subsequently filled.
However, to his dismay, the bank refused to deposit them, and declared that those checks as stale. Hence, they were returned back to ABC Co.
Subsequently, ABC Co. requested Gen X Co. to reissue those checks, or have them verified again by their bank in order for the transaction to process in a smooth manner.
Features of Stale Check:
The main underlying feature of a Stale Check is the fact that it has not been presented to the bank after a considerable time has passed.
Regardless of the reason behind the check not being presented, it would be considered stale, and might not be accepted by the receiving bank in the first go.
Moreover, even if the check has other subsequent information presented in a logical manner like signatures, names, etc., it can be seen that the check would still be considered stale because of the delayed deposit procedure.
What is considered as a Stale Check?
A check is considered to be a stale check if it is not presented by the receiver of the check to the bank after a considerable amount of time.
Therefore, banks are reluctant to accept it without proper verification with the bank. In the same manner, it is also imperative to consider that checks are considered stale primarily because of the reason that banks find it harder to rationalize why checks that were dated months back, have not been presented to date.
Therefore, because of the delay involved, checks are considered to be stale.
How many months is a Stale Check?
Different countries have different requirements when it comes to classification of stale checks. However, the general rule of thumb is that any check that has not been presented to the bank up to a period of 6 months is considered to be a stale check.
However, some banks also consider a check to be a stale check if it is not presented for encashment up till three months after when it has been issued.
Can a Stale Check be cashed?
Banks and other financial institutions are often reluctant to process stale checks because of the inherent risk and ambiguity involved.
Therefore, they always ask for verifications, or check reissuance in cases where a stale check has been presented to the bank for encashment.
However, it can be seen that under special circumstances banks can choose to cash stale checks, given that they are well aware of the risks involved, and they have sufficient reasoning to back the claim that it is not a case of fraud, or any sort of impeachment.
Hence, stale checks can generally not be cashed, unless there are measures and verifications taken either by the issuer of the check, or the person who is getting it cashed.