Take the 2-minute tour ×
Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It's 100% free, no registration required.

In the US, some banks generously offer a "bill pay" service, which is an online page that allows you to mail a (paper) check to a US address. Most banks don't change for this service, which "saves you a stamp".

However, in contrast to hand-written checks, the bill-pay checks get funded immediately when they are sent, not when they are cashed. Occasionally, a check might never get cashed, because it gets lost in the mail or the recipient fails to cash it for whatever reason. When you send a hand-written check, it will expire and you end up not paying. What happens when the pre-funded bill-pay check gets lost? Does the bank refund the money that was never claimed at some point, or does it get to keep it?

Edit: both Chase and Bank of America withdraw the money from my checking account the moment I hit the "send check" button. I never get to see if/when the check has arrived or has actually been cashed by the recipient. I am asking this question because I sent a check two weeks ago, and the money has been withdrawn from my account. However the recipient today told me they have not received anything. So I am wondering if the bank would every let me know if the check got lost.

share|improve this question
2  
My bank does not pre-withdraw this type of check. It's withdrawn when the paper check clears. –  JoeTaxpayer Jun 19 '13 at 4:45
    
Quite a long time ago, a manual payee made the mistake of ripping up the cheque thinking it was spam. They did look like junk mail to the unwary. I called the bank and they said they could stop payment and reissue. –  Paul Jun 19 '13 at 5:17
1  
they withdraw the money first to make sure the check doesn't bounce. –  mhoran_psprep Jun 19 '13 at 12:45
1  
@warren - "Today, RBS Citizens Financial Group, Inc. has approximately 1,300 branches, more than 3,500 ATMs and nearly 19,000 colleagues in 12 states covering New England, the Mid-Atlantic and the Midwest." Right you are sir. –  JoeTaxpayer Jun 19 '13 at 20:27
1  
I have Bank of America, and I use the BillPay feature. I once sent a BillPay paper check to a company that never cashed it. It was apparently a corporate check that had a 90-day expiration date. The check amount was refunded to my bank account after it expired. –  superuser Nov 3 '13 at 5:21

1 Answer 1

Firstly, it isn't so generous. It is a win-win, but the bank doesn't have to mail me a free box of checks with my new account, or offer free printing to compete for my business. They already have the infrastructure to send out checks, so the actual cost for my bank to mail a check on my behalf is pretty minimal. It might even save them some cost and reduce exposure. All the better if they don't actually mail a check at all.

Per my bank

Individuals and most companies you pay using Send Money will be mailed a paper check. Your check is guaranteed to arrive by the delivery date you choose when you create the payment.

...

A select number of companies–very large corporations such as telecoms, utilities, and cable companies–are part of our electronic biller network and will be paid electronically. These payments arrive within two business days...

So the answer to your question depend on what kind of bill pay you used. If it was an electronic payment, there isn't a realistic possibility the money isn't cashed.

If your bank did mail a paper check, the same rules would apply as if you did it yourself. (I suppose it would be up to the bank. When I checked with my bank's support this was their answer.)

Therefore per this answer: Do personal checks expire? [US]

It is really up to your bank whether or not they allow the check to be cashed at a later date. If you feel the check isn't cashed quickly enough, you would have to stop payment and contact whoever you were trying to pay and perhaps start again. (Or ask them to hustle and cash the check before you stop it.)

Finally, I would bet a dime that your bank doesn't "pre-fund" your checks. They are just putting a hold on the equivalent money in your account so you don't overdraw. That is the real favor they do for you. If you stopped the check, your money would be unfrozen and available.

EDIT

Please read the comment about me losing a dime; seems credible.

share|improve this answer
1  
At my bank, you'd lose your dime. When sending a paper check via bill pay, they withdraw the money from my account immediately (it appears as a debit transaction on my statement) and move it to a temporary account somewhere. The recipient gets a check drawn on the temporary account, not on mine (it doesn't have my account number on it but a different one). If the check is not cashed in 90 days, they transfer the money from the temporary account back into mine. –  Nate Eldredge Oct 22 at 18:51
1  
@NateEldredge - what is the difference between moving the money out of the account and freezing it/hiding it? Is there some sort of fraud prevention or security reason? –  MrChrister Oct 22 at 19:29
    
It's mostly just an accounting issue. In my experience, funds that are held (such as from depositing a check whose clearance is questionable) are still included in your overall account balance, but not included in a separate "available balance" until the hold is released. So if the funds were still in my account but held, I'd expect my available balance to drop, but my overall balance to remain the same until the check was paid. That's not what happens - the overall balance drops immediately. –  Nate Eldredge Oct 22 at 20:49
    
There is perhaps a slight security advantage in that the recipient does not get to see my actual account number on the check they receive, and they cannot alter the check to a be paid a larger amount than intended (since the temporary account contains only the exact amount of the check). But mostly it's just internal accounting. (Incidentally, another bank I have used sends bill pay checks as ordinary checks drawn on my account, and places no hold of any kind - I could empty my account and the check would bounce.) –  Nate Eldredge Oct 22 at 20:51

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.