Do you want to know how to write a cheque? It is a skill that could be useful to you.
If you’ve never written a check, you might be nervous about performing this task. It sounds complicated, but it’s actually simple to do and requires only general math skills.
This article will show you exactly how to write a check for any amount of money. You’ll be writing your first checks in no time!
What Is The Purpose Of A Cheque?
A cheque is a type of bank-issued payment. They’re typically used to make payments between two parties who do not operate under the same financial institution.
For example, if you didn’t have a savings or cheque account with your local bank, you could still pay someone who does with the use of a cheque.
Cheques are issued by financial institutions for use by clients, and usually, come with a booklet of identical cheques that have been printed with your personal information on them.
The booklet is usually free (depending on your financial institution), but may have costs associated with it when ordered and replacement pages. Still, want to know how to write a check? Keep reading.
When Will You Use Your Cheque Book?
A lot of businesses don’t accept cheques anymore, but there are still some situations where they can be utilized. Examples are:
- Borrowing funds from someone and wanting to pay them back
- Paying your landlord for rent
- Paying to cover tuition, medical bills, or other large expenses
- Purchase goods and services from specific small businesses
- Paying home maintenance professionals
- If you don’t have an online banking account yet
How to Write a Cheque in 6 Simple Steps
There are numerous fields to be filled up while writing a cheque. You should be cognizant of how to write a cheque and how to fill in the correct details where you ought to.
1. Date of Cheque
The current date is the day when a cheque is written. The cheque should be cashed by the date mentioned on it, after which it becomes stale.
A post-dated cheque means that you have chosen the date on which you want to make the payment. If you write a cheque to a merchant, and the merchant deposits that cheque in his/her account before the payable date comes, then he or she will have to wait till it is an available amount in their accounts before they can use it.
2. Writing the Payee
Fill in the payee’s name on the “pay to the order of” line. Whenever you write a cheque, make sure you spell the name of the payee correctly.
You should make sure that the name is spelt as per their bank’s record. It is important that you do not use abbreviations, acronyms, or synonyms for writing names because it may become difficult for the bank to know how to trace the identity of an individual if something goes wrong.
3. Amount in Numbers
Many who write cheques still struggle with writing a cheque in cents. If, for instance, your cheque amount is 160 dollars and 50 cents, you will have to write it as 160.50.
It is necessary to use two decimals for writing the cents amount. Using the previously outlined example as a reference, it is $160.50, not $160.5.
4. Amount in Words
Next up, write the same amount in words below the payee name in the designated field. This field is not required to be filled in by law, but it is recommended that you write your cheque amount in words as well. This is a recommendation you should take seriously.
At the bottom right corner of the cheque, you will see a signature line meant to be signed on. A legible signature that is recorded with your bank is what you are expected to use there.
This signature is what confirms the validity of the cheque and lets the bank know that you agree to pay the amount to the payee claimed.
This section lets you add a short description stating the reason for that cheque payment specifically. Examples of this are: “July rent payment” or “Phone bill”. If you want to remember the reason for writing the cheque, this is useful.
Pros and Cons of Using a Cheque
- They are convenient when relatively compared to cash
- Payments can be stopped at any point in time
- Safely levels are quite high when you use cheques
- When paying large sums of money, cheques are very useful if you know how to use them
- A cheque can be traced with relative ease
- They are very easy to carry around globally
- They are considered obsolete
- They are not taken as legal tender in places
- Creditors often decline to accept them
- Cheques are valueless if the owner has no money in their account
What Features Appear on a Cheque?
We have now covered the pros and cons of using cheques. It is time to talk about the features of a cheque and how they are positioned on the cheque. These features include:
- The details of your bank
- A spot in the to fill in the date (DD/MM/YYYY)
- A line labelled “PAY TO THE ORDER OF” where you’ll write the recipient’s name
- A line ending in “DOLLARS”, where you must spell out the payment amount
- A space to print the amount in numerals
- Name, address, and postal code
- A line labelled “MEMO” where you can describe the cheque’s purpose
- Another line beside it where you can put your signature
How Do Cheques Work?
They are easy to understand. If you check, the final feature that you will see on a standard cheque is four sets of numbers.
These digits are unique to each cheque and let the receiver’s bank locate your account so they can withdraw the funds via electronic means. These sets of numbers are:
- Cheque Number
- Transit Number
- Institution Number
- Account Number
Where Can I Record My Payments And Transactions?
Your bank ought to include a register when you order your cheque book, so that knowing the following will be much easier
- How many cheques you are going to write
- How much money you are issuing
- Who you’re paying the money to
- When you’re making these transactions and why
You should also know that filling out your cheque register is optional. But listing all your transactions can definitely help you monitor the trajectory of your money and lower the risk of fraud. You can also use your register to keep track of cheques that people give you if it pleases you to do so.
What If I Make A Mistake When Writing A Cheque?
Keep in mind that your cheque may be ruled invalid, or you could send funds somewhere you don’t want to if you print your recipient’s name wrong, enter a false payment amount, or forget to sign the bottom of the cheque.
Here are some things you could do to avoid such unfortunate situations and how to do them:
- One horizontal line should be enough to cross out the mistake, then input what is correct
- Your initials should be provided after the error. This is to indicate approval
- Write ‘void’ in the block across the entire cheque if the error is bad beyond repair
- Completely destroy the void cheque and dispose of it if you are not satisfied with just voiding it
How Can I Keep My Money Safe When Using Cheques?
Have doubts about using cheques because you want your money safe? Here are some safety measures you can take:
- To stop anyone from erasing and rewriting the cheque, write it with a pen instead of a pencil
- Have a consistent signature that is very hard to forge
- When filling out the cheque, don’t just leave lots of blank spaces open, and don’t allow anyone to fill out the cheque for you.
- It is advisable to not make any cheques payable to cash. This is a very popular culprit in the event of loss or theft because it allows the withdrawal of cash without the depositing of a cheque.
Alternatives to a Cheque
In the event of you still having doubts about whether you want to write a cheque or not (even after such a comprehensive article), then you could just use other payment methods like:
- Credit Cards
- Debit Cards
- Automatic Payments
The best way to pay someone is usually with a cheque, money order, credit card or debit card. But there are still some businesses and institutions that only accept cash or cheques, so know how to use them.
There are times when the ATM won’t give you cash when you need it. On days like this, all you can do is give them a cheque. In that case, you need to write one. But if you’re out of cheque books (or running low), it’s handy to know who can print you some more.
How Long Does It Take For A Cheque To Conclusively Clear?
For cheques on or below $1,500, it is 4-5 days. In the case of cheques over $1,500, the max period of holding is 7-8 days. Keep in mind that cheques could clear sooner in some cases.
People who have a good and trustworthy history with their bank can leverage this by writing the cheque and asking their bank to help them clear it quicker.
Can I Deposit A Cheque Written Out to My Maiden Name?
According to Payments Canada (an authority in settling financial transactions in Canada), there is no official statement on whether the name on a cheque has to be in line with the name of the account holder who is doing the depositing. A financial institution’s individual policy is the determinant of how they go about it.