The most important paying instrument provided by the banks is cheques. It is one of the traditional payment methods which has a good demand even in this digital era. The working of a cheque is simple where the account holder issues the cheque duly filled and the bearer can either encash it or deposit it in the bank where the amount gets credited into the account.
Some of the very famous terms that are related to cheques are cancelling a cheque, validity of a cheque, bounced cheque, post-dated cheque, etc.
What is a Post-Dated Cheque?
A cheque consists of limited fields like Name, Amount, Date & Signature. Every field on a cheque is considered important and needs to be filled carefully. If the date on a cheque is a future date then it’s called Post-Dated Cheque (PDC Cheque). This means the cheque would be eligible for withdrawal only as per the date given on the cheque.
For example, if today’s date is 15.03.2022 and the date on the cheque is 01.05.2022 then the cheque can be encashed only on or after 01.05.2022. These kinds of cheques are called post-dated cheques.
How to write a post-dated cheque in the UAE?
Writing a post-dated cheque is nothing different from a regular cheque. You need to give the bearer’s name (to whom the cheque is issued), the amount of the cheque, mention AC Payee on the top left corner if the amount should be credited to the bearer’s account.
And the most important and different factor on a PDC cheque is the Date. Give a future date on which your cheque can be encashed. Finally, verify the details given and sign on the cheque.
When a post-dated cheque is issued in the UAE?
While the term “Post-Date Cheque” itself explains the cause, the situations when it can be used are,
- Insufficient balance: When you don’t have sufficient balance in your account, you can give the cheque for a future date by when you’ll have sufficient balance.
- If you want to give someone a cheque before its time, you can give them a post-dated cheque.
Post-dated cheque validity in the UAE
The validity of the cheque in the UAE is 6 months from the mentioned date on the cheque. The same applies to a post-dated cheque as well.
Is it safe to issue a post-dated cheque?
Apart from the regular payments, post-dated cheques are issued to banks or financial institutions as a part of the loan documentation. When the customer defaults on the loan payments for a longer period, banks deposit the cheques to encash it. If there are funds in the account the bank or financial institution will encash it or else the account holder will be filed for the cheque bounced case.
The safety of a PDC cheque depends on the account holder. Irrespective of whom the cheque is issued to whether it’s a financial institution or a person, there should be funds available in the account at the time of withdrawal or else the account holder will face legal cheque bouncing charges in the UAE.
A post-dated cheque is a valuable facility provided to account holders in the UAE. This makes them not miss future payments. But the account holder needs to ensure there are funds available in the account at the time of withdrawal to avoid complications.
About the author
Nikitha is a Senior Analyst at MyMoneySouq.com. She has been writing about personal finance, credit cards, mortgage, and other personal finance products in the UAE. Her work on Mortgage loans has been featured by the GulfNews and other popular Financial Blogs in the UAE.
