Canceled checks serve as valuable records of financial transactions, providing proof of payments made and assisting in the reconciliation of bank statements. Understanding how long banks are required to retain canceled checks is crucial for proper financial management and record-keeping. This guide explores the regulations and best practices surrounding the retention of canceled checks by banks.
Legal Requirements for Bank Retention of Canceled Checks
In the United States, national banks, federal savings associations, and federal branches or agencies of foreign banking organizations are subject to specific regulations regarding the retention of canceled checks. According to the Office of the Comptroller of the Currency (OCC), banks must generally retain canceled checks, or copies or reproductions of the checks, for a period of five years.
Exceptions to the Five-Year Retention Period
There are certain exceptions to the five-year retention period for canceled checks:
- Checks of $100 or Less: Banks are not required to retain canceled checks for amounts of $100 or less for more than two years.
- Checks Paid Over the Counter: Canceled checks that are paid over the counter, such as teller’s checks or cashier’s checks, are not subject to the five-year retention period.
- Checks Destroyed Due to Natural Disasters or Other Events: Banks may destroy canceled checks due to natural disasters, such as floods or fires, or other events that make retention impractical.
Customer Access to Canceled Checks
Banks are required to provide customers with copies of canceled checks within a reasonable time frame upon request. Customers may be charged a fee for this service.
Best Practices for Retaining Canceled Checks
While banks are required to retain canceled checks for a specific period, it is recommended that individuals also keep their own records for longer periods. Canceled checks can serve as valuable evidence in the event of disputes or audits.
Here are some best practices for retaining canceled checks:
- Keep Canceled Checks for at Least One Year: Even though banks retain canceled checks for five years, it is advisable to keep them for at least one year for tax purposes and to facilitate the reconciliation of bank statements.
- Review Canceled Checks Regularly: Regularly review canceled checks to identify any unauthorized transactions or errors.
- Store Canceled Checks Securely: Keep canceled checks in a safe and secure location to prevent unauthorized access or loss.
- Consider Digital Storage: Scan canceled checks and store them digitally for easy access and protection against loss or damage.
Banks are required to retain canceled checks for five years, with certain exceptions. Customers have the right to request copies of canceled checks within a reasonable time frame. It is recommended that individuals also retain their own copies of canceled checks for longer periods for financial record-keeping and dispute resolution purposes. By understanding the regulations and best practices surrounding the retention of canceled checks, individuals can effectively manage their finances and protect their financial interests.
How long should you keep receipts and tax documents
FAQ
How long should you keep canceled checks and bank statements?
Should I keep old checks?
How long should I keep old check registers?
What to do with Cancelled checks?
How long should you keep canceled checks?
However, after seven years , you can shred things like registers, ledgers, credit card and bank statements and sales receipts. To finalize the answer of how long to keep canceled checks for businesses, you should hold onto canceled checks for three years before shredding. Consider also: Tax Tips: How Long Should I Keep My Tax Records?
Can I store canceled checks?
You may also need documents to prove your claims if you suffer losses or property damage covered by your insurance policies. You can’t store canceled checks if the bank or other financial institution doesn’t send them to you. But you can order paper copies of checks after your monthly bank account statements arrive.
Do banks have to return canceled checks?
Banks are not required by law to return canceled checks. If you receive your checks or copies of checks, it’s usually because of your account agreement and your bank’s policies. Depending on your account agreement or the […] How long must a bank keep canceled checks / check records / copies of checks?
Can I get a copy of my canceled checks?
But you can order paper copies of checks after your monthly bank account statements arrive. Alternatively, you can print out your statements and retain them for the seven years you may need them for IRS audits and other tax purposes. Banks that don’t return your canceled checks must keep copies for seven years .