What should you do if you lose your checkbook? Although paper checks may seem a bit quaint and out of date to some people, they are still used by about 20 percent of the American population to pay bills or purchase goods and services.
While checks are quite convenient, losing a checkbook can be one of the least pleasant financial experiences you will ever go through.
Here’s what you need to know about the steps and precautions you should take if you have lost your checkbook, as well as the case for using a different form of payment to keep yourself protected.
Stop Payment on All Checks
When you lose your checkbook, the first thing you’ll need to do is to instruct your bank to stop payment on all of your checks.
You can do this by calling your bank directly, though many banks have an online option for stopping checks. The fee to stop payment varies from bank to bank, but most will charge around $30.
Keep in mind that stopping payment means that legitimate checks you wrote before losing your checkbook may also be blocked, so it’s a good idea to check with the businesses you paid by cheque/check recently and arrange alternative payments for the ones that will be affected by your stop payment order.
Cancel Your Account and Set up a New One
Unfortunately, dealing with the loss of your checkbook isn’t as simple as just cancelling your checks.
Due to the administrative costs involved in keeping a stop order on checks, very few banks will go beyond this minimum requirement, meaning that you will have to pay for a new order every six months if you want to keep your current account.
Because of this, it’s almost always best to cancel your current bank account and set up a new one to permanently invalidate your lost checks.
Keep in mind that when you set up your new account, you’ll have to reconnect all of your existing payments to it.
This means updating your bank account information with your employer, setting up new automatic payments with utility and service providers and updating investment accounts that may be tied to your previous checking account.
Though it will be a hassle, going through this process is the only surefire way to make sure your old checks are never honored without paying a stop order fee twice a year on an indefinite basis.
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File a Police Report
If you believe that your checks have been stolen, it’s important that you file a report with your local police department.
The report will create a record of your missing checkbook that can help to protect you in case of identity theft later on.
If a criminal uses your checks to defraud a business, you may find yourself locked in a dispute with the merchant over the payment.
Having a police report on file will help you prove that you were not responsible. It’s also vital that you keep a copy of the police report in your personal records in case a dispute arises.
What Should You Do if Your Checks Are Cashed?
Even with all of these precautions, there’s still some chance of a check slipping through the cracks.
In one prominent case that made headlines a few years ago, for example, Wells Fargo bank was unable to stop payment on a stopped check because it had been received for processing before the customer put in the stop order.
While such instances are rare, it’s important that you know what to do if you find yourself dealing with one.
If you haven’t done so already, the very first thing you need to do if a lost check is cashed is to file a police report.
The fraudulent check constitutes identity theft, and it’s important to start the paper trail now so that you won’t be liable later on.
Next, you should immediately report the forged check to your bank.
Most banks have internal systems for dealing with forged checks, and a comparison of your signature to the one on the forgery should be enough to convince the bank that a crime has been committed.
More often than not, this will lead to the bank refunding your account.
While a lawyer may be necessary if things don’t go smoothly, you can usually begin this process without retaining an attorney.
Using Alternative Payment Methods to Avoid the Hassle
As you can see, losing your checkbook is a much bigger deal than most people imagine it to be.
To head off the sheer inconvenience of dealing with a lost checkbook, it may be a good idea to pay for goods and services with a credit or debit card.
Although these cards can certainly still get lost or stolen, they are much easier to cancel out than a checkbook, meaning that you’ll be able to regain control of your financial life without filing complex stop orders or having to set up entirely new bank accounts.
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How To Pick A Good Credit Card
The first step is to figure out what your financial goals are by having a credit card. If you want to pay off debt faster, a 0% interest balance transfer card, like the one offered by Discover-It may be a good fit.
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If you have a high interest balance elsewhere, the Discover It® – 18 Month Balance Transfer Offer gives you a year and a half zero-interest timeline.
On the other hand, if you don’t already have high-interest credit card debt, but instead are looking to buy a high-ticket item and want a long time runway to make zero-interest payments then the Discover It ® – Cashback Match™ is best.
Got $0 Debt? Which Credit Card Is Best?
One of the best ways to pick a credit card if you’re not in debt is to spot your spending patterns and pick a credit card that rewards you most.
Once you’ve identified where the bulk of your monthly spend is going, you can pick a credit card that rewards you most in those categories.
Chase Sapphire Reserve, for example, is among the best credit cards for dining and travel. However it comes with a high annual fee.
If you want to avoid an annual charge, ABOC Platinum Rewards may be a better fit. It also has generous rewards on restaurants, gasoline purchases, travel, and groceries.
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