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Columns: Dr. Don
Don Taylor, Ph.D., CFA, CFP Expert: Don Taylor, Ph.D., CFA, CFP
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Banks will keep charging to maintain stop payment
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It costs to keep stop payment

Dear Dr. Don,
I put a stop payment on a personal banking online check. It cost me $32. That's OK, but six months later the bank asked me for $32 more to reinstate the stop payment on the same check. This has to be done every six months for the rest of the life of the account. How would you like that?
-- Leland Larceny

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Dear Leland,
I can understand your frustration, but that's the way the banking system works. Part of the logic behind the six-month window is that if the check wasn't presented for payment in the first six months, it's not likely to show up ever.

It's an expensive proposition for the bank to keep a stop payment request in the system forever. If that was the requirement, you'd be paying a lot more than $32 for a stop payment. So the bank isn't the bad guy here. You get to decide whether you want to renew the stop payment or play the odds and only stop payment on the check for six months.

Obviously, your decision will be based in part on the dollar amount of the check. It's easy to argue that you should renew the stop payment on a large check. Another possibility is to close the account and open a new account.

You didn't say why you're stopping payment on the check, but stopping payment or closing an account to avoid repaying a payday loan is a criminal offense in some states. If you're already up for a renewal on the stop payment, it's unlikely that this is your situation.

Your bank may have a policy of not cashing stale checks. If that's the case, your risk after six months is reduced, if not eliminated, by the bank policy.

Bankrate.com's corrections policy -- Posted: June 5, 2007
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