Ok, so I have looked this question up and gotten scrambled answers and I dont know what is right. I just got a paycheck from catering a wedding and I dont know if it would expire or if I can hold onto it and use it as a bond.
5
-
6What would be the benefit of "using it as a bond"? You won't get interest payments on it.– glglglMar 23, 2021 at 16:48
-
1Depends on jurisdiction (see answers for USA and Canada). Where are you located?– yoozer8Mar 23, 2021 at 16:59
-
I can see holding a check if you do cash accounting and want to be cagey (if push came to shove, would the IRS get you? Technically possible, realistically probably not) around the start of your fiscal year to defer the income. Otherwise, what is the benefit to you?– user662852Mar 23, 2021 at 17:49
-
A check is no way like a bond. Checks can bounce.– Michael HarveyMar 23, 2021 at 20:01
-
If you want a bond, cash the check and buy a bond. As mentioned, checks are not bonds.– JimmyJamesMar 23, 2021 at 20:38
Add a comment
|
2 Answers
Short answer : YES
There's no such things as a perpetual check.
As a general rule of thumb (and this is a U.S. answer), checks should be good so long as the bank on which they're issued is willing to honor them. (I can imagine the howls of protest from those who don't read further!)
That being said, MOST of the time, you have six months to do something with a check before you run the risk of it not being honored, at most I'd say a year. There has to be some finality to the transaction for the issuing business, so at some point between 180 and 365 days from when they issued it, they're likely to void it, making it worthless to you (unless you want to frame and hang it o your wall as some kind of memento).
Still, one of the questions I have is, why would you hang on to it as a "bond"? As a check, it doesn't earn interest, so what good does it do to hang on to it for some future purpose? If you want to use it as a bond then cash it and buy a bond with it.
I know that sounds a bit smart alecky (grin) but it's an honest answer. I can't think of any good reason for you to delay cashing/depositing the check and then using the proceeds to invest the way you indicate you want to.
-
1"I can't think of any good reason for you to delay cashing/depositing the check" there is no benefit and makes it much more likely to bounce when you do go to cash it. People close checking accounts all the time. Mar 23, 2021 at 20:40
The answer depends on your jurisdiction. In the United States, the normal answer is that they become "stale" at the end of the sixth month. There are statutory exceptions in most states, but they would not in any ordinary case apply to a regular check.
If a check is stale, then a bank does not have to accept it for deposit. Also, if it is stale, the drawing bank does not have to accept the draft for payment. With that said, they can accept it. The difficulty is that they cannot discriminate. They cannot make a special exception for you or your case, no matter how meritorious the circumstance. They accept all or reject all, or have a highly defined policy of when and how they will accept and process them.
It is unwise to hold checks. They can be lost. They can be destroyed. They do not earn interest.
If you would like to hold a bond, cash it and buy a U.S. savings bond. The only restriction on savings bonds is that they cannot be cashed in the first six months. Alternatively, open a savings account. Either is better than holding a check.
