What is a Cancelled Cheque, How to get a cancelled cheque, Will cheque required signature and is the cheque leaf safe after cancellation or leads to misuse, what are the precautions to be taken to prevent unauthorized…
What is Cancelled Cheque
When you register your account at any banking service they will provide cheque book which contains different cheques and every cheque has a different transaction ID associated with it, Cheques are popular for over five to six decades right now and are one of the cleanest ways of transferring money from one account to another.
Some people might wonder that the use of cheques has been limited and those are not really used in real life anymore, Frankly speaking Cheques are still being used in large quantities not just by individuals but also by corporations and big industries.
Today we are going to talk a lot more about what we usually call a cancelled cheque which simply means a Cheques which has two drawn lines across it, At the same time in between those two lines the word cancel is written, So that it identifies the given Cheques as not eligible for any transactions, It is indeed one of the major requirements to have a cancelled cheque submitted to banks and different financial institutions while looking for a financial resource.
In simple terms, whenever you want to purchase something over EMI or loan from a financial service and bank then you have to submit them all the proofs along with those you also need to submit a couple of cancelled cheques.
How to make a cancelled cheque
Nowadays everyone is looking to buy something like a car or house and to be frank cancelled cheques are also used for purchasing phones over EMI, So, it does not come as a surprise that every individual might need to learn how to cancel a cheque and to use the same cancelled cheque for application.
So, I am going to show you the simple process through which you can create a cancel cheque and use it at your disposal, First you need to tear the cheque from your cheque book and then follow the below instructions.
- Draw two diagonal lines making the symbol x on the cheque
- Now across the diagonal lines representing x you have to write the word “cancelled”
- Now turn the back of the cheque and there writes cancelled word again
In this way you have now created a cancelled cheque which you can use for different reasons, But when submitting these cheques, you have to be very aware that you do not give these out anyone out there even if it’s cancelled, At the same time, you do not have to sign the cheque if you are not transferring any money to the individual or the company.
What are the uses of different cancel cheque?
As we have already mentioned that cheques are usually used while applying for loans and at different financial institutions, Financial services and banking sector when taking applications for different purposes have made it mandatory for cheques to be submitted.
- Financial institutions want to make sure that any individual applying for a loan or EMI is a regular user and is a registered user at the bank
- You will have to submit a cancel cheque whenever you want to take a loan such as home loan, car loan and even for a personal loan
- Cancelled cheques are very much required when applying for EMI’s from different financial services and stores for consumer durable products
- If you are interested in applying for mutual funds and investment schemes then you have to provide a cancel cheque while completing the KYC documentation
- Let us assume that you have some investments made in a fixed deposit then there can be cases where you need to withdraw the money and during that time you will be asked to submit a cancel cheque
- Similarly, even during transactions like mutual funds and investment scheme money withdrawal you have will be asked to have a couple of cancelled cheques submitted
- Electronic clearance service which is used for completely withdrawing and deducting the money from your bank account requires a cancelled cheque submitted
- People also like to purchase different insurance policy and during the purchase you will be asked to submit a cancelled cheque
Important Things to Remember While Cancelling a Cheque
Well people might think that cancelling a cheque is quite simple and it is quite simple indeed but there are a lot of important steps that need to be followed, and the reason why I advise and suggest you to prepare well before giving out a cancelled cheque is because you will be giving access to all your bank’s money if the cheque has not been cancelled properly.
- Cancel a Cheque : Always make sure that the cheque you want to cancel has two lines drawn across the cheque and between those you need to write the word “Cancelled”
- Pen Color to Use : There are a lot of people who might get confused thinking about what color of cheque to use while cancelling a cheque, So, note that you are only allowed to use either Blue Pen or Black Pen to cancel a cheque.
- You cannot use both Blue Pen and Black Pen to cancel the same cheque, it will be rejected
- You cannot use Green, Red or any other colored pen to cancel the cheque or else it will be rejected
- Cancelled Cheques Risks : People are still worried that when they give a cancelled cheque then will they face any risk to their money. But do not worry because if you properly cancel a cheque then it will not be eligible to withdraw any money.
- Sign on Cancelled Cheque : People usually sign on normal cheques and then submit it to the person or organization. But when it comes to cancelled cheques you do not have to sign the cheque.
- Only Two Lines : Some people might be in a hurry while completing loan or different EMI process and during which they will only draw two lines across the cheque, but note that if the word cancelled cheque is not written on the cheque then it will not be considered as cancelled.