What Happens If You Deposit a Canceled Check Into Your Bank Account?

Save yourself time, money and the ability to have a checking account -- don't try to deposit a canceled check. It will cause a range of problems in your account and maybe even for you personally. When a check is canceled, the person who wrote it has the money already taken out of her account. You -- or another person named on the check -- have received the money, so now it's just a historical record.

If your name's not on the check, you have no right to the payment and could face legal consequences for trying to deposit or cash it. Passing a bad check is a criminal offense, and penalties include prosecution and possible jail time. At a minimum, your bank will most likely close your account and report you to a credit bureau agency. Since many banks order credit reports on checking account applicants, you'll have difficulty opening an account in the future.

If the canceled check made its way into your account, the money would be removed within days. The bank would hit you with a processing charge, and depending on the check amount and your current balance, your account could then be overdrawn. This would cause your bank to refuse payment on checks you have written, creating a snowball of negative effects on your finances.

Under normal circumstances, your bank won't allow you to deposit a canceled check. A teller will see it's clearly stamped "canceled" or "paid" on the face. The only likely way such a transaction could happen would be by oversight. A teller may not notice the mark, or perhaps you placed it in an ATM machine or night depository where the bank verifies the transaction after you leave. In this case, the teller would remove the transaction since it would be stamped as already having cleared the check writer's bank. If the check made it past the teller, the operations department would block the money from going into your account.

The main use of a canceled check is to serve as a payment record, and it is used in disputes to prove money has changed hands. Many banks no longer return the original check with your bank statement, so you'll likely only have access to a copy. Canceled checks are becoming a thing of the past as recent federal regulations promote more use of electronic processing of check images rather than paper originals.