A post-dated cheque is a negotiable instrument that promises payment for future dates. When writing this cheque, the drawer adds a future date for encashment based on the need and fund availability.
Thus, a post-dated cheque comes with a validity period specified by the law. Knowing about this type of payment method ensures that you can agree to payment in advance. However, you must know the rules and process for writing such cheques to ensure smooth transactions.
Read on to learn what is a post-dated cheque writing process, its rules, validity, penalties and more.
This legal tender allows the depositor to withdraw cash from the drawer’s account on a future date. In simple terms, with this cheque, individuals and companies can make payments to another individual or company on a fixed date.
This safe option helps you make secure payments conveniently. Furthermore, if you don’t have sufficient funds, this instrument gives you some time to arrange for funds while giving assurance of payment to the receiver.
Here are a few essential points to know:
Once you understand the meaning of a post-dated cheque, writing it is very simple. This is because most information is similar to a regular cheque, with only one key difference between them. You must not write the current date in the given column; instead, write a future date for encashment.
However, you are also required to send your bank written instructions on when the cheque allows encashment. This helps banks avoid premature withdrawals, which can lead to penalties to the payee and overdraft charges.
Also Read: What is Cheque Leaf?
As per Section 138 of the Negotiable Instruments Act, all cheques with a future date fall under legal tender. So, if your cheque bounces, you will be facing legal penalties for dishonouring it, which are as follows:
If you are making a payment using post-dated cheques, keep the following points in mind.
With these facts in mind, you can avoid any discrepancies or errors that can hinder the payment through a post-dated cheque. But if you do not have a sufficient balance in your account to clear your cheque, then taking a personal loan from Fibe can help you get the required funds.
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This is a cheque dated for deposit or encashment at any future date. Since the funds are withdrawn after the date mentioned on the cheques, they are called post-dated cheques.
Once drafted, these cheques are valid for 3 months.
Yes, banks accept all duly signed post-dated cheques with signatures. However, these cheques should be valid for a certain period.
To stop fund withdrawal from post-dated cheques, you must give your bank an instruction for not clearing the payment. Simply write a letter or an email to your bank with the required details and reason for such action.