Consumers should keep in mind that the routing and account numbers on a canceled check can be used by criminals to transfer funds.
A canceled check is a check that has already been withdrawn to the designated account. On a bank statement, the customer can receive their original canceled checks showing that these checks were paid, or copies of each. Typically, the institution from which the money is drawn, a bank, stamps the check to indicate that the funds secured on the check have been delivered to the person or institution that received it.
Checks are cleared by a financial institution when funds are paid from the designated account.
If someone needs to prove they made a payment, they can use a canceled check as a receipt. Every now and then, human error means that a payment is not recorded, especially to other banks, credit card companies, or various utility companies. By showing the canceled check to any institution that questions whether the person made a payment, he essentially proves that he did. Financial experts recommend that people keep this proof of payment until the next invoice shows a record of the payment.
Canceled checks should be destroyed rather than simply thrown away to prevent confidential information from being stolen.
People can also use canceled checks to prove business expenses, although it’s also a good idea to keep original records or receipts for business transactions. The old check doesn’t really say what the person made a payment for, only that they made a payment. This may not be enough evidence for someone who needs to justify business expenses to the company they work for or to tax agencies such as the Internal Revenue Service (IRS).
Some people retain their canceled checks for years, which is largely unnecessary. Usually, after verifying that someone has received their payment, the person can get rid of the check. That doesn’t mean he should just throw it in the trash. While another person usually cannot use the check again, it does contain information that can be used to access that person’s bank account.
For example, these documents still contain the bank routing number and bank account number. The check may also reveal other personal information such as the account holder’s address, phone number, and even driver’s license number. It’s generally a good idea not to include driver’s license numbers on checks and just include the address and phone number. People may not even need to include a phone number, and if a company requires it, the account holder can write and initial.
The main issue with a canceled check is the routing number and bank account. Increasingly, people can make payments or buy things on the Internet with just this information, especially if they also have the full name of the account holder. So it makes sense to shred old checks once they are no longer needed so that no one can gain access to valuable bank account information.