Prompt action is vital when canceling a check or payment, also known as issuing a stop payment. It can be complicated, but taking immediate steps can put you in control once you discover an issue.
Here's an in-depth look at stop payment orders, how they work, and when they are effective.
What is a Stop Payment?
A stop payment is a request to cancel a payment before it has been processed. In other words, it is canceling a check before it can be cashed or deposited. A customer can put a stop payment on a check or an ACH.
Why would I need a Stop Payment?
There are many reasons why a stop payment might be requested, including:
- Incorrect information on a check
- A check was mailed to the wrong address
- A lost or stolen check
- Insufficient funds in a bank account
- A dispute over a purchase or services rendered
Once a stop payment becomes necessary, you will need to contact your bank at once.
How does a Stop Payment work?
To request a stop payment, a customer must contact their bank and provide payment information, including:
- The check number
- The date it was written
- Who it is was written to
- The new check number if a replacement check was issued
After getting the necessary information, if the check hasn't been processed, the financial institution flags it and stops it from clearing.
Stop payment orders on written checks typically expire after six to 12 months, depending on the bank. However, stop payment orders on ACH payments can last indefinitely. In the case of a stop payment on an ACH, you have the control to stop one payment while others process, or to halt all future payments from a particular company. There will be no expiration date if the stop is on all future payments, ensuring your financial security.
Regardless of the reason, quick action is best when you want to stop payment on a check or ACH. The sooner the bank has the information, the sooner it can help you avoid potential issues.
Have questions or need assistance?
If you have questions about this topic or need assistance with your banking needs, please speak to one of our knowledgeable staff at your local Bar Harbor Bank & Trust branch. We’re here to help you build a solid financial future.
