A stale cheque, also known as a stale-dated cheque, is a cheque that has not been presented for payment within a specific period of time after its date of issuance. This period varies by country but is typically around six months. After this period, the cheque is considered stale and may not be honored by the bank, as the validity of the cheque has expired.
It is essential to present a cheque for payment within the specified time frame to ensure its acceptance. If you are in possession of a stale cheque, it is advisable to contact the issuer and request a new cheque, as banks are not obligated to cash or deposit stale-dated cheques.
Here is an example to illustrate a stale cheque using specific dates and numbers:
- Issuance Date: On January 1, 2023, John issues a cheque to Mary for $500.
- Expiration Date: In John and Mary’s country, cheques become stale after six months from the issuance date.
- Stale Date: The cheque would become stale on July 1, 2023 (six months after January 1, 2023).
- Presenting for Payment: If Mary presents the cheque to her bank for deposit or cashing on or before June 30, 2023, the bank is likely to honor the cheque. However, if Mary presents the cheque on or after July 1, 2023, the bank may refuse to process the cheque, as it has become stale.
In this example, the cheque for $500 issued by John to Mary on January 1, 2023, becomes a stale cheque if not presented for payment by June 30, 2023.