The number of people who pay with checks has dropped significantly in the age of online and mobile banking, but bank checks remain a convenient and relatively risk-free payment method.
It’s convenient to use bank checks to pay for a down payment on a new house or a used car because they are drawn directly from your account and don’t take up much space. When you write a bank check, money is taken right out of your account. In spite of these advantages, however, there’s a cost.
It was found that the prices of bank cheques issued by major banks were significantly higher than those of other institutions, such as credit unions and building societies. Mozo conducted the study. There are a number of other institutions that issue bank cheques for between $5 and $15, according to the site.
Depending on whether the check was issued online or in person at a branch, the fees charged by the same bank may differ as well.
Commonwealth Bank and Citibank were among the most expensive for bank checks, charging customers $15 per check. Next, NAB charged $12, and ING Direct charged $11, both of which were in the same price range.
A standard bank cheque cost $5 for customers of non-banking institutions Gateway Credit Union, Hunter United, and Newcastle Permanent. Outside of town, the fees were less expensive.
Out of the big four banks, Westpac’s online bank check issuance costs customers as little as $5, making it the most cost-effective option. Customers who prefer to open their accounts in person will find that Westpac and ANZ are the most cost-effective options, both charging a $10 issue fee.
Compared to other banking fees, these may seem insignificant; however, they can add up over time, especially if you have to pay in this way on a regular basis.
This is a situation where asking your bank about requesting a bank check online at a reduced cost would be beneficial.
Money orders are a convenient alternative to bank checks because they can be drawn on any bank or post office in the country. As a result, sending money orders via mail is a more secure method of payment than sending cash via mail.
Standard money orders up to $5000 cost $8.95 from Australia Post. For a bank check, this is a more affordable fee than what most banks charge. The cost is even lower if you opt for an online money order.
There are significant differences in the fees charged by money transfer services like Western Union and MoneyGram compared to Australia Post, according to a comparison conducted by Mozo.
The maximum amount that can be paid with a money order is usually around $5000, despite the fact that bank cheques and money orders are both convenient payment options
As a result, when dealing with large sums of money, they’re not as convenient as using bank checks.
Instructions and Problems With Signing a Check Over
When a check is written out in your name, you are the only person who has the authority to cash or deposit it. You have the option of signing the bill over to another individual (so that they can cash it or deposit it), but doing so is fraught with a number of potential complications.
However, if everything goes according to plan, another person will be able to use a check that is written out to you.
How to Do It
Before handing over a check to another individual or company, it is important to ensure that the statement will be honoured by a financial institution. Sign the bottom of the bill to indicate your approval if the motion is successful. Depending on the bank, you may be required to write.
“Pay to the order of [Person’s First and Last Name]” under your signature, while others only require the person who is depositing it to sign their name under yours. Both signatures are required, however. “Pay to the order of [Person’s First and Last Name]” under your signature. Next, you will need to hand the check over to that individual so that they can deposit or cash it.
Will the Bank Allow It?
Financial institutions may refuse to accept checks that have been signed over to a third party for whatever reason (that is, somebody other than the person who wrote the check and the person who was originally paid by the check). Banks are not obligated to comply with your demands, but making an attempt is not illegal. Banks may have policies prohibiting this practise, or they may see the presence of a third-party check as a warning sign and refuse to deposit or cash the check.
Ask the person you’re handing a check over to to check with their bank first if you’re going to do so. If you’re going to sign a check for someone else, make sure you get their permission first.
After the check has been signed, you should not add additional signatures or names to the back of the check (which can create confusion and delays at the next place you try to cash the bill). Find out if it’s allowed first, and then learn about the rules and regulations that must be adhered to.
There is a better chance that things will run more smoothly if you go to the bank with the person depositing the check. Remember to bring identification with you.
When you do this, the bank is effectively handing over your money to someone else. In many cases, they are unwilling to accept a level of risk that exceeds their tolerance. Banks must rely on the testimony of a third party to verify your identity or signature if they can’t verify it themselves.
Giving someone else your signature on a check is not the best solution, and there are some situations in which you simply cannot do so. Although the strategies presented here may take more time than simply endorsing a check to another party, at least you can be certain that they will be successful.
If You Have a Bank Account
If you need to pay somebody with money you’ve received by check, try cashing or depositing the check yourself to avoid any hassles. The first $200 of funds, or the first $5,000 if it’s a cashier’s check, will typically be available from a review within one business day after the review has been completed. There are a lot of different ways to send money online for free, and using one of those methods is probably a lot simpler than trying to get around the policies of a bank.
If You Don’t Have a Bank Account
You should seriously consider opening a bank account if you do not already possess one or another means of processing checks. Although there are fees associated with certain types of bank accounts, not having a bank account is likely to cost you more in the long run, both in terms of time and money. Free checking accounts can be obtained through a variety of means, particularly at regional credit unions and through online banking.
Exploring Checking Account Options
You could try using a check cashing service if it is simply not possible for you to open a bank account; however, the fees associated with these services are typically quite high. It’s common knowledge that a number of retail establishments will cash checks for free, particularly tax refund checks.
If It’s Difficult to Get to Your Bank
If your bank doesn’t have a branch or ATM where you are, or it’s inconvenient for you to get there, these two solutions might make your life easier:
- Mobile check deposit: Your bank might allow you to take a picture of a check—often until late into the evening for a same-day guarantee. Then you can withdraw cash or send money electronically.
- Credit unions: If you’re a credit union customer, then you might be able to use branches of other credit unions (assuming they participate in the shared branching network).If You Want to Pay Without Cash
Prepaid debit cards are an option to consider if your bank does not support mobile deposits or if you are looking for an affordable alternative to traditional banking services. Be wary of cards with high fees, as prepaid providers are obligated to disclose any and all fees to customers before they can sell them a card. If you want to avoid carrying cash but are worried about having it stolen (for example, while sending it through the mail), you should instead pay with a check or a money order instead of cash.
Depositing a Check for Somebody Else
Ask yourself whether or not you can really trust the person who asks for your help depositing their check. You’re risking your own money and the bank’s good name if you agree to this. To make matters worse, even if the check was written to a friend of yours (or someone else entirely), your bank will still demand that you cover any loss if the payment fails. This is true even if all you wanted to do was assist a fellow human being.
It is possible for your account to go into negative if you deposit a check that is later found to be invalid (resulting in a chain reaction of problems). While you could try to enlist the help of a friend to raise some cash, this is rarely an easy task. There is a high probability that you will be conned out of money if you agree to cash someone’s check.
Don’t Get Scammed
How exactly does lending a helping hand result in monetary loss? Frequently, a bank will let you immediately convert a check into cash or make the funds appear in your available balance, giving the impression that you are free to spend all of the money in the check if you so choose.
After some time has passed, your bank will process the check and make an attempt to collect payment for it. Do not hand over cash unless you have complete faith in the individual you are assisting, as it may take your bank several days or even weeks to discover that a review was fabricated.
If you cash a check for somebody else and they give you a poor review, unfortunately, your bank will not reimburse you for the money you spent.
In order to recover the money, you will need to confront that individual (provided you are able to locate them) and possibly take legal action.
Parts of a Check and What the Numbers Mean
Checks don’t come with instructions, and if you make mistakes when writing one, it could affect you financially. But once you understand the different parts of a check, you’ll feel confident completing, receiving, and depositing paper checks.
Checks contain pre-printed information that’s important to understand, as well as blank sections that need to be carefully and accurately filled in each time you write a review.
In addition to being necessary for writing a check yourself, understanding the parts of a review helps you:
- Order new checks.
- Make sure check orders come out correctly.
- Set up direct deposit instructions.
- Verify that any checks you receive are filled out correctly.
Reference the examples of a completed check and a blank check as you read through a detailed explanation of each component.
Parts of a Check: An Overview
Each of the blue numbers corresponds to an essential aspect of this blank check. Scroll down for both the name and purpose of each of these sections. Some elements of a review are self-explanatory, such as the date. Others have exciting quirks unique to check writing, such as writing out dollar amounts with words.
- The personal information section provides details about the account owner, who is the one paying money.
- The payee line designates who can receive the money.
- The dollar box displays the value of the numerical check-in format.
- The amount of your check is written out in this section using words instead of numbers.
- The memo line is a space for any notes about the purpose of the check.
- The dateline serves as a timestamp for the check.
- The signature line verifies that the account owner has approved the payment.
- Your bank’s contact information and logo are usually printed on the check.
- Your bank’s American Bankers Association (ABA) routing number tells banks where to find the funds for the check.
- Your account number at your bank is another identifier that lets the recipient know where the money for the check will come from.
- The check number (note that this appears in two places) is a security measure to identify each payment and prevent fraud.
- Your bank’s fractional ABA number contains the same information as the ABA in list item 9, but it’s often presented in another format in the upper right corner of the check, as well.
The back of a check, which isn’t pictured here, includes a space for endorsements. A review is supposed to be endorsed or signed by the recipient before it is deposited or cashed.
It is common practise for identifying information about the account owner to be pre-printed in the upper-left hand corner of a check. Checks almost always have this information pre-printed on them.
This information is typically the contact information that is associated with the bank account or the contact information that you choose to have printed on checks that you order from your bank. Alternatively, it could be both.
If you are concerned about your privacy, you have the option of reducing the amount of information that is printed on your checks or taking other precautions, such as using a post office box rather than your actual address.
It is not unusual for a retailer to demand particular information before accepting a check as payment. It’s possible that they’ll handwrite your phone number on the bill, for instance. They will have an easier time protecting themselves in the event of check fraud as a result of this.
In this section, you will indicate who will get money transferred out of your checking account. Write the name of the individual or organisation that you want to pay, which is referred to as the payee. Only the payee has the authority to cash, deposit, or otherwise transfer the check to another party.
It is preferable to use the full name of the recipient rather than a nickname so that the person who is depositing the check does not experience any confusion or difficulty.
It is possible to pay your check in the order of “Cash” in the event that you do not wish to identify a particular individual or organisation. However, this poses a threat because not only the person you intend to pay can cash the check; anyone else can do so as well.
In the “dollar” box, write the amount of your numerical check-in format (for example, “1,250.00” rather than “one thousand two hundred fifty”)
For reasons of safety, you should make it as challenging as possible for unauthorised individuals to change the number that you write in this box.
Write the numbers so that they are as far to the left as you can get them.
Enter any numbers after the decimal point, followed by a decimal.
Include a “.00” before any dollar amounts that are round.
Because this box is included on the check as a courtesy or convenience to the customer, it is sometimes referred to as the “courtesy box.” The number that you enter into this box will not be factored into the calculation to determine the appropriate level of your review. The official amount, on the other hand, can be found in the line below, which comes before the word “DOLLARS.”
In principle, the two sums ought to coincide, but in practise, this is not always the case. When something like this occurs, the written words take precedence over the numerical values in the dollar box.
Check Amount Written Out With Words
Use words to describe the amount of your check and write it here (as opposed to using numerals). If you’re reviewing a $10.50 item, you might write “Ten and Fifty out of One Hundred” in this section.
As a last resort, you can cross out the amount of your check with a single line if there is room either before or after the amount that you write.
The value of a cent is shown here as a fraction of a dollar, rather than as a whole cent.. due to the fact that one dollar contains one hundred cents, but the number of cents that exceeds one hundred.
Any discrepancy between the dollar box amount and what is written down should not be taken into account by a bank. Changes in words are more difficult to implement than changes in numbers.
There is no requirement that you write everything down on the memo line. If you want to write additional information on the front of a check, you can do so virtually anywhere on the front of the check as long as you don’t cover up any important information. You should not, however, write any memo information on the back of the bill or use the back of the bill for any other purpose.
Please provide the date in the space provided. You have the option of writing a date in the future and notifying the bank if you wish to postpone the transaction.
You cannot, however, simply write checks with a post-dated date and expect the bank to hold off on processing them. Unless you make it clear to the bank that you want them to honour the date that is written on the review, they are under no obligation to do so.
If you notify your bank or credit union about a post-dated check in a timely manner, that notice is generally good for a period of six months from the date it was given. The information will be useful for them for a period of two weeks if you inform them verbally rather than in writing. During this time, they must refrain from cashing the check prior to the date that is printed on it.
The line for the payer’s signature is located in the bottom right-hand corner of the bill. This is a safety measure, and the signature can be validated by comparing it to the signature of the account holder that is already on file.
Signing a check is the final step in the process of writing one, and it should not be done until after all of the other parts of the bill have been thoroughly reviewed. If you sign a check that is blank in other respects and then lose track of it, whoever finds it will be able to fill in the blanks with whatever they choose.
You might notice the letters “MP” in the space immediately to the right of the signature line. It’s a sign that the check has a microprinting security feature, which is what it says here. The use of microprinting results in words being printed so small that they are undetectable to the naked eye.
Your Bank’s Contact Information
Every check that you write will have the name of your bank printed on it. This section, on the other hand, does not contain any vital information, such as the routeing number. You might just see the bank’s logo instead of a phone number and address if that’s all that’s included.
If you have been given a check by someone, this portion of the document will inform you of their banking information as well as the origin of the funds. It is possible for you to cash the check at that bank (at any branch location; it does not need to be at the same address that is shown on the bill).
However, financial institutions are not required to cash anyone’s check under any circumstances. If you are not one of their customers, they might make you pay a fee or simply refuse to cash the check.
ABA Routing Number (MICR Format)
In the bottom left-hand corner of your check, you will find your bank’s “address,” known as the routeing number. A check number is provided when you write a check so that other banks can contact your bank and collect funds directly from your account when you write a check.
When it comes to routeing numbers, even though they are identical to those found in fractional ABA, the route number is written in different font and with a different type of ink. Using the “Magnetic Ink Character Recognition” (or MICR) method, computers can read and process reviews more quickly and easily.
Your Account Number
Account numbers are printed at the bottom of checks in some cases, and MICR codes are used to identify them.
This particular account number is usually located in a middle position on a check, with two other numbers on either side of it. It’s a good idea to check your account number twice just in case it’s in a different format on other statements. As an example, a business check is slightly different from a check generated by an online bill payment system.
To find your account number, look for a symbol that resembles a “.” This is a successful strategy. Your account number is shown just before that symbol.
A check number is a reference number that will help you:
- Balance your chequebook
- Your bank has processed track which checks
- Know which checks are still outstanding
Some checks have the check number printed in MICR to help prevent fraud.
This number usually appears in two places, both the upper- and lower-right corners. Again, checks may be formatted differently depending on where they are printed. A good tip for finding the check number is to look for the smallest or shortest number—that’s often the check number.
ABA Routing Number (Fractional Format)
In addition to the MICR line at the bottom of the check, the ABA routeing number of the bank is typically printed in its fractional format in the top right corner of a check.
On a personal check, the number is usually located in the upper right corner, but in some cases it may be in a different location.
This number, like the MICR line, represents the bank, its location, and the Federal Reserve branch that provides banking services to it. Prior to the introduction of MICR, routeing numbers were issued by the American Bankers Association (ABA), which has been issuing numbers for over a century.
FAQs About Cheque
Who Is Able To Endorse A Check?
The person who is drawing the check has the option of crossing it either generally or specially. If the check is open, the holder has the option of writing a general or special notation on the back of the check. The holder of the check has the ability to cross it again after it has been crossed generally.
What Is The Total Number Of Parties In Cheque?
In the process of writing and cashing a check, there are three parties involved. The person or organisation that creates the cheque is referred to as the drawer. The drawee is the financial institution, and the payee is the person or organisation that ends up with the cheque.
What Does It Mean When A Check Has A Double Line?
A check is considered to be crossed if it contains two lines that are parallel to one another and run either across the entire check or through the top left corner of the check. The presence of this double line notation indicates that the check can only be deposited into a bank account in a straightforward manner.
What Are The Factors That Lead To A Check Being Dishonoured?
If the banks give the amount to the payee, then the cheque is considered to have been honoured. On the other hand, the cheque is said to be “dishonoured” when the payee is denied the amount that was written on it by the bank. To put it another way, dishonour of check refers to the situation in which the bank does not pay the amount of the check to the payee as instructed on the check.
What Exactly Is The Function Of A Cheque?
A cheque is a financial instrument or document that instructs banks to transfer money from one bank account to another. Cheques are most commonly used in the United Kingdom and Canada. The individual who creates and signs the check is referred to as the drawer, while the payee is the name given to the recipient of the funds in the check.
- Bank cheques are drawn directly from your account.
- The financial website Mozo conducted a study in which it compared the prices of bank cheques issued by major banks with those issued by other institutions such as credit unions and building societies.
- The site discovered that the prices of bank cheques issued by these other institutions range from $5 to $15.There may also be differences in fees charged by the same bank, depending on whether the check was issued online or in person at a branch.
- We found that Commonwealth Bank and Citibank were among the most expensive for bank cheques, charging customers a fee of $15 for each check.
- We found that Westpac was the most cost-effective option out of the big four banks, with its online bank check issuance costing customers as little as five dollars.
- In this scenario, it would be beneficial for you to enquire with your bank about the possibility of requesting a bank check online at a reduced cost.
- If you are looking for an alternative to bank cheques, money orders are typically issued and payable at a bank or post office.
- Additionally, sending money orders through the mail is a safer option than sending cash through the mail.
- Although bank cheques and money orders are both convenient payment options, the maximum amount that can be paid with a money order is typically around $5000.Because of this, they are not nearly as convenient to use as bank cheques in circumstances in which large sums of money need to be paid.
- Next, you will need to hand the check over to that individual so that they can deposit or cash it.
- It is not against the law to make an attempt; however, banks are not required to comply with your demands.
- There may be policies in place at banks that prohibit this practise, or the bank may consider the presence of a third-party check to be a warning sign and therefore refuse to deposit or cash the check.
- If you insist on signing a check over to somebody else, you should ask them to check with their bank before you endorse the bill.
- When a bank is unable to validate either your identity or your signature, they have no choice but to rely on the testimony of a third party.
- Giving someone else your signature on a check is not the best solution, and there are some situations in which you simply cannot do so.
- If you need to pay somebody with money you’ve received by check, try cashing or depositing the check yourself to avoid any hassles.
- You should seriously consider opening a bank account if you do not already possess one or another means of processing checks.
- Although there are fees associated with certain types of bank accounts, not having a bank account is likely to cost you more in the long run, both in terms of time and money.
- You could try using a check cashing service if it is simply not possible for you to open a bank account; however, the fees associated with these services are typically quite high.
- If your bank doesn’t have a branch or ATM where you are, or it’s inconvenient for you to get there, these two solutions might make your life easier:Mobile check deposit: Your bank might allow you to take a picture of a check—often until late into the evening for a same-day guarantee.
- Then you can withdraw cash or send money electronically.
- Prepaid debit cards are an option to consider if your bank does not support mobile deposits or if you are looking for an affordable alternative to traditional banking services.
- Additionally, you should never agree to cash a check for a complete stranger because there is a high probability that it will be a scam.
- But once you understand the different parts of a check, you’ll feel confident completing, receiving, and depositing paper checks.
- In addition to being necessary for writing a check yourself, understanding the parts of a review helps you:Order new checks.
- Set up direct deposit instructions.
- The personal information section provides details about the account owner, who is the one paying money.
- Your bank’s contact information and logo are usually printed on the check.
- It is common practise for identifying information about the account owner to be pre-printed in the upper-left hand corner of a check.
- This information is typically the contact information that is associated with the bank account or the contact information that you choose to have printed on checks that you order from your bank.
- Write the name of the individual or organisation that you want to pay, which is referred to as the payee.
- Please use words to indicate the amount of your check and write it on this line (as opposed to using numerals).
- If there is space either before or after the amount that you write out, you may want to cross it out with a single line so that the value of your check cannot be changed by anyone else.
- If there is any difference between the amount written in words and the amount in the dollar box, the bank ought to disregard the amount written in the dollar box.
- There is no requirement that you write everything down on the memo line.
- The line for the payer’s signature is located in the bottom right-hand corner of the bill.
- ABA Routing Number (MICR Format)The “address” of your bank can be found in the bottom left-hand corner of your check, and it is known as the routeing number.
- Because some statements use a different format, it is a good idea to double check the account number that you have.
- Look for a symbol that resembles a “” to locate your account number.
- In the process of writing and cashing a check, there are three parties involved.
- The person or organisation that creates the cheque is referred to as the drawer.
- The drawee is the financial institution, and the payee is the person or organisation that ends up with the cheque