Banking is a big part of our daily lives as it helps us save money, transfer funds and apply for loans or credit cards. To make banking easier, we use different documents like cheques. A cheque is usually used to pay someone or withdraw money from your account. But sometimes, you may need to give a cancelled cheque for documentation purposes.
So, what is a cancelled cheque and why is it important? A cancelled cheque is a special type of cheque that cannot be used for payments but is still useful for other purposes like verifying your bank account.
In this blog, we will explain how to write a cancelled cheque, the uses of a cancelled cheque and its importance in banking.
What is a Cancelled Cheque?
A cancelled cheque is simply a cheque that you can no longer use to make payments. This is because you have marked it as cancelled. To do this, you draw two lines across the cheque and write the word “CANCELLED” across it. Even though the cheque is cancelled, it still shows important details like your account number, bank name, and branch details. A cancelled cheque is mostly used to verify your account details when you need to set up payments or other services. It is a safe way to share your bank details.
How to Write a Cancelled Cheque?
Here’s how to write a cancelled cheque in easy and simple steps:
Step 1: Take an Old Cheque: Choose a cheque that you no longer want to use. This is important so that you do not accidentally use it for making payments. It is best to use a cheque that you have already decided is no longer necessary.
Step 2: Draw Two Lines: Take a pen and draw two horizontal lines across the middle of the cheque. This shows that the cheque is no longer valid for any transactions.
Step 3: Write “CANCELLED”: Write the word “CANCELLED” on the cheque in big and clear letters. This would make it obvious that the cheque is cancelled.
Step 4: Keep Bank Details Visible: Even though the cheque is cancelled, your account number, bank name, and branch details should still be visible. These are important for verifying your account information.
Step 5: No Signature Needed: You do not need to sign a cancelled cheque. Just marking it as cancelled with the two lines and the word “CANCELLED” is enough to make it void.
Step 6: Store Safely: After cancelling the cheque, make sure you store it in a safe place. Even though it is cancelled, it still contains sensitive banking information. Hence, it is important to protect it from misuse.
Uses of a Cancelled Cheque
A cancelled cheque is often used to verify bank details, as mentioned earlier. Here are some important uses of a cancelled cheque:
To Verify Bank Details: A cancelled cheque is often needed when you need to confirm your bank account details for things like direct deposits or automatic payments. It would help the other party verify your account information without you needing to send sensitive details like your password.
For Loan Applications: When you apply for loans, banks and financial institutions often ask for a cancelled cheque to verify your bank account details. This helps them know where to send the loan amount if approved. And it also shows that your account is active and valid.
For Refunds and Payments: Several companies may ask you for a cancelled cheque when they need to process refunds or make payments directly into your bank account. As the cheque is cancelled, it would ensure that no one can try to use it for making a payment.
For KYC (Know Your Customer) Process: A cancelled cheque is often required during the KYC process, which banks and other financial institutions use to verify your identity. It helps them make sure that the bank account they have on file belongs to you.
For Fund Transfers: Some online money transfer platforms ask for a cancelled cheque to confirm the account details of the person receiving the funds. This ensures that the money is sent to the correct bank account.
Conclusion
So, this is all about what is a cancelled cheque, its uses and how to write a cancelled cheque to verify your account details for direct account transfers or loans. Speaking of loans, if you need an instant loan of up to ₹3 lakh, download the CASHe app. It is easy to use, requires no paperwork and offers quick approval. Whether it is for medical emergencies, higher studies, or shopping, CASHe loans are a great option.
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