A stop payment is a request a bank account holder can make to the bank about how to handle a specific check if it reaches the bank. This request is given to the bank usually after a person has written a check and delivered it to someone else, and the reasons for asking the bank not to pay the check can be varied. Most often, someone will request the stop payment if a check is lost. There are good reasons to take advantage of this service, but also some costs people should be aware of if they use it.
A lost check can be a problem — it could be picked up and cashed by someone who doesn’t have a right to cash it. Alternately, the bank account owner has checks stolen from a car, or a handbag snatched that contains signed checks to someone else. Clearly, making sure that no one has a right to illegally draw on a personal account is a good idea. In certain cases, people put a stop payment on a check when they feel they’ve been defrauded in some way and do not feel like they will be able to work this out with the individual to whom they wrote the check.
In other circumstances, folks who know a check will overdraw an account place a stop payment on it. This measure is not always wise because the person or company being paid may report the check as bounced, especially to check/creditor agencies. People can usually only clear this up with payment of the check in full and possibly some fees, or they may find they can no longer write checks at any company or store that uses check verification programs.
While there are some strong reasons to consider a stop payment, most banks do not offer this service for free. They may offer some kind of assistance if a whole checkbook is stolen, or they might change an account number so someone with stolen checks couldn’t use them, but generally for the single check, there will be a charge. Charges can vary, but finding out exactly what they are makes good economic sense because they may be as high as $50 US Dollars (USD) or more.
Sometimes, it doesn’t make sense to stop a payment on a check for a very small amount. For instance, it could be more expensive to stop payment on a $10 check than it is to simply pay the check if it’s cashed. On the other hand, it would be much more sensible to stop a payment on a check for a very high amount. It’s worth losing $20-50 USD instead of $100 or $1000 USD.