Have you Heard about Cancelled Cheque?
Many times, financial service providers want you to provide a cancelled cheque to avail the services such as EMI transactions, loans and more.
If you want to know about canceled cheque and steps to avoid misuse it, then you can go ahead and go through this article. Read on!
When are Cancelled cheque used?
A cancelled cheque is generally used to prove that a specific account number is yours and belongs to you. It is because a cancelled cheque contains your name, number, along with an authority that the bank account is legal.
Why do many service providers demand a Canceled Cheque?
You may be asked to submit a cancelled cheque for multiple reasons such as completing the KYC process, applying for loans, starting a SIP and setting up ECS. An insurance company may also ask for it at the time of renewal of the policy and buying it afresh. Even while you are withdrawing your EPF, you may have to submit cancelled cheque. Cancelled cheque may be required at the time of opening a Demat account.
How do you cancel a cheque?
Cancellation of cheques is easy. All that you need to do is strike two parallel lines across the cheque and write the word ‘cancelled’ across the lines. Also, you don’t need to sign a cancelled cheque. It is because it is used to validate your bank account details and not intended for making a transaction.
How can you avoid your cancelled cheque to be misused?
Even though a cancelled cheque is a cancelled cheque and only for the intention of validating your bank account details, it may still be subject of abuse. Hence, the first thing to do is you need to cancel a cheque the right way so that it does not become the tool of abuse. Thus, you should ensure to write the word ‘cancelled’ across the lines. You should always be informed to know that cancelling a cheque in the right manner is the first thing to do. The next thing to remember is never signing a cancelled cheque as it is only to authorize that the account belongs to you. The norm is writing the word ‘cancelled’ on it for sure. You should ensure to write ‘cancelled’ using only dark and waterproof ink.
What else can you do to avoid the misuse of your cancelled cheque?
Other than the methods discussed above to protect your cancelled cheque from being misused, here are a few more recommendations. Other than the above recommendations, you should also ensure to cross-check the identity of the person or institutions to which you are handing the cancelled cheque. It is a must to do. If you have time, you should ensure to visiting the bank or certain institutions to process verification formalities. It is to reduce the possibility of anyone faking his identity and using your cancelled cheque for fraud activities.
If you think that any unauthorized transaction is being made from your bank account, then the immediate thing to do that is alerting your bank about it. This way, they can know about the traces of such a transaction and indulge in the further course of action.
You are now aware of the concept of cancelled cheque, how to write cancel it and steps that you can take to ensure that there are no fraud activities done using it.
If you are about to issue someone a cancelled cheque, then you will now be in a better position to practice the safety tips to keep your leaf of cheque safe from frauds.
