What Is a Stop Payment Fee and How Does It Work?
Understand stop payment fees: what they are, how to request one, and their effectiveness in managing your financial transactions.
A stop payment is a formal request to a financial institution, such as a bank or credit union, to prevent a specific payment from being processed. This service allows individuals to halt payments, whether a traditional paper check or an automatic electronic debit. Financial institutions typically impose a fee for this service.
Understanding the Stop Payment Fee
A stop payment fee is a charge levied by banks for the administrative effort and operational costs involved in intercepting a payment. This fee accounts for the resources required to flag a transaction and prevent it from clearing an account.
These fees generally range from $20 to $35, though the exact amount can vary significantly among financial institutions. The cost may depend on factors such as the account type or the method used to submit the request. Some banks might offer reduced or waived fees for specific account tiers or for requests made through online banking portals.
Initiating a Stop Payment Request
To place a stop payment order, gather precise transaction information before contacting your bank. This includes the payee’s name, payment amount, and the date the payment was issued or scheduled. For checks, the specific check number is also required. You must also provide the account number from which the payment was intended. A payment cannot be stopped once it has already been processed or cleared.
Financial institutions offer several methods for initiating a stop payment request. You can use an online banking portal, a mobile application, contact customer service via phone, or visit a local branch. Verbal requests for checks may require written confirmation within 14 days.
Effectiveness and Scope of Stop Payments
The ability to stop a payment depends on the transaction type and its processing status. Stop payment orders are generally effective for personal checks, Automated Clearing House (ACH) debits, and pre-authorized recurring bill payments. For ACH payments, contacting the merchant to revoke authorization is often recommended before contacting your bank.
Certain types of payments are difficult or impossible to stop once initiated. Wire transfers are almost immediately processed and are generally irreversible once sent. Cashier’s checks and money orders cannot usually be stopped because the funds are guaranteed or prepaid. Debit card transactions, once processed, are also challenging to stop, often requiring direct contact with the merchant for resolution.
A stop payment order for a check typically remains active for six months if submitted in writing. Verbal requests for checks may expire after 14 days if not formally confirmed in writing. For ACH payments, a stop order can be placed for a single instance or as a permanent revocation of authorization for future debits, usually requiring a bank request at least three business days before the scheduled payment. Many banks allow for the renewal of stop payment orders on checks, sometimes extending the duration to 24 months. A stop payment request can generally be revoked through your bank’s digital banking services, by phone, or in person at a branch.