Stale and post-dated cheques are two of the many types of cheques that an individual can cash in at a bank.
Key Takeaways
- A stale cheque is a cheque that has not been presented for payment within a specified time frame (six months) and is no longer valid, while a post-dated cheque is a cheque with a future date written on it and cannot be cashed until that date.
- A stale cheque becomes invalid due to the passage of time, while a post-dated cheque is intentionally issued with a future date.
- Banks will refuse to honor stale cheques, while post-dated cheques can be cashed when the specified date arrives.
Stale Cheque vs Post Dated Cheque
The difference between stale and post-dated cheques is the period in which they can be presented for payment by the individual. Stale cheques are cashed in after three months, while post-dated cheques are only shown after the specified date on the cheque.
When a cheque has a date written on it three months or more before it is submitted to the bank for payment, it is called a stale cheque.
A post-dated cheque has a date that occurs sometime in the future. The recipient of the cheque has to wait till that date to cash in the cheque; until then, they cannot present it to the bank.
Comparison Table
| Parameters of comparison | Stale cheque | Post-dated cheque |
|---|---|---|
| Definition | A stale cheque is presented by the recipient for payment a considerable period after it has been issued. | It is issued so that one can present it for payment only after a considerable time. |
| Date printed | The date on the cheque is the date that it was issued, but it becomes stale after three months. | The date printed on the cheque is set at any time in the future, regardless of how many months or years. |
| Acceptance at a bank | The bank will only accept the cheque for payment if the individual has gotten approval to present it. | The bank must accept the cheque if the recipient presents on the date issued or after. |
| Reason for issuing | It is a standard cheque issued to a recipient for payment of a service provided. | The issuer might not have enough funds in their bank account. Hence, a future date is set. |
| Responsibility | It is the recipient’s fault here, and not the issuer’s responsibility, for cashing the cheque late. | The issuer is only responsible for having funds in their account so the recipient can withdraw. |
What is Stale Cheque?
A cheque becomes stale when individual hands it to the bank for payment after the last date to cash it has passed. The date printed on the cheque is the date that it was issued and is meant to be cashed before the three-month period has ended.
At times, there is also an exception where the cheque can be presented to the bank if they approve of the validity of the cheque, regardless of how long it is dated.
A standard solution followed when a cheque becomes stale is to approach the drawer of the cheque for revalidation, where the drawer writes the current date on the cheque so that the recipient can cash it for payment.
The bank has no obligation to honour a cheque presented to them six months after the issuing date, and it is hence the fault of the cheque holder. The recipient of the cheque is the sole person responsible in the case of a cheque becoming stale.
“if a cheque has been issued and is dated 20/01/2020, then it is valid till 20/04/2020, which is precisely three months after the issuing date and is referred to as the final payment date by the bank.”
What is Post Dated Cheque?
The drawer of the cheque presumably sets the payment date in the future, and the cheque holder can only present it to the bank on or after that date (or within three months of the payment date).
The issuer of the cheque dates it in this manner because they might not have enough funds within their account to provide the payment at an earlier notice, and hence they date it in the future to amass the money and pay the recipient for their service.
The above also shows that only the issuer or drawer of the cheque is responsible here, as they have to ensure that they can make the transaction on the payment day.
Also, a fascinating key point about post-dated cheques is that in case the drawer of the cheque does not have all the funds amassed and still has to pay the recipient, they can do so in the manner of instalments. For example –
“If Jack owes a total sum of 5000 rupees to Ram and cannot write a cheque for the amount, he can write five cheques of 1000 rupees, each dated a month apart, and pay in the form of instalments.”
Main Differences Between Stale Cheque and Post-Dated Cheque
- Stale cheques are outdated ones presented to the bank after the payment date has passed. Post-dated cheques are dated so that they can only be cashed in on a period ahead in the future.
- Cheques become stale after three months from the issuing date. A post-dated cheque can be dated at any time in the future; it may be months or years from the issue date.
- The only person responsible in case a cheque becomes stale is the cheque holder. In the case of a post-dated cheque, the bank can, and only the cheque issuer is held responsible.
- Stale cheques are issued as standard cheques for providing payment for any service. Post-dated cheques are dated in that manner because the issuer might not have enough funds in their bank account at that moment.
- Banks are not obligated to honour stale cheques, while in the case of post-dated cheques, the bank must accept the cheque.
- https://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=3363&context=ylj
- https://lawrepository.ualr.edu/cgi/viewcontent.cgi?referer=https://scholar.google.com/&httpsredir=1&article=1885&context=lawreview
Last Updated : 11 June, 2023
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
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