Canceled Check Definition and How To Get a Copy

What Is a Canceled Check?

A canceled check is a check that has been paid or cleared by the bank it was drawn on after it has been deposited or cashed. The check is "canceled" after it's been used or paid so that the check can't be used again.

Someone who has written a check may also cancel it before it has been deposited or cashed by alerting the issuing bank, thus voiding the check.

Understanding Canceled Checks

A canceled check is one that has been paid after going through a check clearing process. The check is canceled once the money has been drawn from the bank the check was written on, also known as the drawee. The payee is the person the check is written to, and the payee's bank receives the deposit. The process of creating a canceled check includes the following:

• The payee, or the person the check is written to, signs the back of the check.
• The check is deposited into the payee's bank account.
• The payee's bank notifies the drawee's bank, and the transaction goes through the system of the Federal Reserve Bank.
• The drawee bank (or the bank the check was written from) pays the payee's bank the funds if there are sufficient funds in the payor's account.
• The payee's bank deposits the cash or makes the funds in the deposit "available" for withdrawal.

Today, nearly all checks are cleared through the Federal Reserve Banking system electronically, even in cases when the deposit is a paper check. The deposit and check-clearing process is still performed, but the paper check almost never leaves the facility where it is deposited.

Instead, to increase efficiency, a special scanner creates a digital impression of the front and back of the check, which it sends to the other bank. When the check finally clears the account of the payor or the person who wrote it, it's considered canceled. In short, a canceled check means the clearing process has finished, and the check can't be reused.

How Customer Access to Canceled Checks Works

Traditionally, canceled checks were returned to checking account holders with their monthly statements. That is now rare, and most check writers instead receive scanned copies of their canceled checks, while the banks create digital copies for safekeeping.

In most cases, customers who use the best online banks also can access copies of their canceled checks via the web.

Example of a Canceled Check

Let's say Lee writes a check to David. David takes the check to his bank and deposits it. The bank may credit David's account in the amount of the check automatically or may delay clearing the deposit. David's bank may make a portion of the funds available to David until the check clears through Lee's bank. David's bank sends the check electronically to Lee's bank. Lee's bank debits Lee's account for the amount of the check, sends the funds to David's bank, and stamps the check as canceled.

A canceled check means the clearing process is finished, and the check can't be reused. As a result, canceled checks can be used as proof of payment.

Canceled Checks vs. Returned Checks

While a canceled check is honored by the bank, a returned check is a check that didn't clear the payor's bank, and as a result, the funds won't be made available to the payee or the depositor. There are a few reasons a check can be marked as returned, the most common of which is insufficient funds in the payor's account.

However, the check can be returned for other reasons, including:

• The date the check was written was longer than six months ago.
• The payor's account is closed.
• The person who wrote the check doesn't have signing authority to write checks for the account.
• A stop payment order was placed on the check.

If someone writes a check and there isn't enough money in the account to cover it, the bank may return the check to the payee. Typically, a fee is charged to the person being paid by their bank, and the bank of the person paying they money charges a fee to the their account for writing a check that ultimately bounced due to non-sufficient funds.

The Bottom Line

Canceled checks are an important part of the check settlement process. They mark the successful settlement of a check transaction. You can cancel a check yourself by voiding it or requesting a stop payment from your bank. To get a copy of a check that has been canceled, you'll usually need to request it from your bank directly or access it via your online or mobile banking account.