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What Is a Canceled Check?

People use checks to make payments to various individuals and organizations. Checks can be more convenient in many cases, especially when transactions involve large amounts of money. Checks are used for a variety of purposes, and the basic idea is that money is taken out of the checking account of the drawer (the person who writes the check and makes the payment).

When a person writes out a check, he has to ensure that there are enough funds in his bank account to cover the amount indicated in the check. The payee (the person the check is written out to) then has the right to turn the check in for cash. Before this can happen, though, the bank requires certain procedures to be followed. The bank processes the check, and this can take anywhere from a day to several banking days.

Once the check has been processed, the money will be given to the payee. Depending on the specific circumstances, the payee can receive the cash in person, or the payee can have the money deposited to his bank account. Once this has been done, the check is labeled as a canceled check. That is, the check has been cashed, and there is no longer an obligation on the drawer to provide funds.

In order to formally acknowledge that a check is a canceled check, the bank makes a mark on the check. This is usually a stamp attesting to the fact that the amount has been paid. As such, a canceled check is actually legal proof that you have paid your financial obligation. In this sense, it can be considered a receipt.

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