On expired checks, 0% interest and credit scores
The stock market makes the headlines, but spending and savings issues are often the biggest. Here are some recent questions from readers:
Q: From Carol to Bellevue: “While doing some cleaning recently, I found an old bank envelope containing checks that were to be deposited in our bank. They never did.
“They are from 2018, around $ 100 in total. There is a $ 6.50 coupon rebate check, a $ 25 payment from a friend who gave a birthday present I bought for a surprise party, a $ 40 check from a ‘a medical company which is sort of a reimbursement for co-payments, and about $ 30 from an insurance company which is a sort of premium refund / adjustment. “
“The smaller check says it’s void after 90 days. The others say nothing about not being valid.
“Can I still cash them?” Do the people still owe me?
A: You still owe the money because you never received the payments, but the checks become “stale” and can become problematic after six months. They pose a real threat of rejection after a year.
The Uniform Commercial Code, which applies in most states, states that banks are not required to cash a check more than six months after it is written. The Federal Reserve does not really have a policy on stale checks; the protocol varies according to the banks, accounts or even the cashiers who take care of [or mishandle] the transaction.
You hope that a cashier [or an ATM] does not notice old dates and processes checks on an account that remains open and active. If the check is processed and then rejected, you may have to pay a deposit / cash fee, depending on your bank’s policies, even if it was not declined due to insufficient funds.
Bankers don’t like discussing expired check policies because they know how easily something can go through, and because they know that demanding customers expect them to hang on. “Cancellation after 90 days”, even when banks generally consider checks to be good for one year.
Rather than trying to pass an old check, talk to your banker. Some banks flag old checks and pass them through the issuer before making payment. You might have better luck if you go to the bank where the check was issued, which might work in your friend’s case.
If you’re lucky, that fixes the problem, as leaving a stale check doesn’t change the amount you were owed.
If the check is not cleared because of its age, your real problem again is the collection.
It means contacting the sender.
As a rule, it is straightforward to get government checks and corporate checks reissued by insurers and large, established businesses. Less likely are personal checks – you will need to contact that friend and apologize for your oversight – refunds / complaints with an expiration date, or any payments made to you from specialized accounts that are dissolved after the checkout process. payment completed.
If your stale check is for a small amount and the issuer is difficult to locate – like a remittance company or class action payer, where accounts were set up just to process a mass mailing – you’ll need to decide whether the juice is worth the time and effort to collect.
Q: From Will in Midlothian, Virginia: My wife and I are moving soon and we will have expenses for new furniture and objects for our new accommodation. We were going to use an interest-free credit card offer to pay for everything, but then we saw that the furniture store had a ‘same as cash’ offer.
“My wife thinks it’s better. I think with 0% interest there is no difference. who is just?”
A: The devil is in the details, which can ultimately determine who is right. Pay off your debts during the promotional period, however, and it will likely be a raffle.
Obviously, it’s hard to beat a 0% offer, but if you get this rate on a balance transfer or using a courtesy check issued by your card provider, a fee may be attached. A 2% balance transfer fee is roughly equivalent to paying two points on your money; know your costs, because it is not “free” if you pay a fee.
Also be aware of what happens to your rate at the end of the hook period, as it might not be a good deal if you wear and fall into debt beyond the promotion period.
“Like in cash” deals all aim to pay off debt on time; make this schedule and you won’t pay any interest or fees, so “like cash”. If you don’t pay all of the debt, you will likely owe all of the interest that would have accrued during the promotional period.
Thus, a cash-only transaction is the best choice if it is paid in full and on time. Otherwise, the interest-free deal is better as you will only owe interest on the basis of what is owed after the promotion period ends.
Q: From Joe in Toledo, Ohio: “I had an old credit card that I didn’t use. I saved it for emergencies. The bank just wrote to say it was closed. Do I need to get a new card? What does this do for my credit score?“
You haven’t used the old card for so long that it’s been cut, so it doesn’t look like you NEED a new one. Nonetheless, decide how you are going to handle future emergencies and find a dedicated no-cost card for this purpose if that makes you comfortable.
Having a closed account can hurt your credit score; you have less credit available and balances, even on purchases you pay monthly, account for a larger portion of that credit.
That’s why I suggest consumers use every card they have every now and then (say at least once every 18 months), keeping them active and making issuers less likely to cut you off.
Opening a new card restores your available credit, but can adversely affect your credit score in the short term (new credit application, average length of your credit relationship decreases since you got a new card, etc.). Take the step that creates the greatest financial peace of mind; people who are comfortable with their finances are generally not agitated by small fluctuations in their credit rating.