Understanding Cheques: How To Cross A Cheque & Issue Them


Admit it, most of us are unsure how to cross a cheque and to issue cheques.

What is a cheque? What is that important piece of paper?

A cheque is a document that directs a bank to pay the specific amount of money to the individual named in the cheque called payee, the person writing the cheque is known as the payer while the bank on which the cheque is drawn is always the drawee.

In order to use a cheque, one needs a savings bank account to issue a cheque in their own name. That’s where the money is going to come from. The transactions have to be handled carefully as it may lead to some serious fraud.

You might come across cheques during business dealings or when taking a business loan. Albeit being old school, writing cheques is one of the safest and most convenient ways to make a payment.


How To Write A Cheque?

With technology and internet banking, most of us would not get the chance to write a cheque. However, there will still be unexpected situations where you need to issue a cheque or receive one.

You may think it is one of the easiest things to do, but you can easily mess it up. There are a few important things you should consider while writing a cheque so that someone cannot easily misuse it.

#1. Avoid leaving spaces

The most crucial thing while writing a cheque is, you must not leave spaces between the words and the numbers. Also, do not leave spaces between the name and the surname. This is important since someone can fill the gaps between numbers and alphabets and can easily fraud you.

#2. Cross the cheque

While paying someone via cheque you always want to make sure that it goes to the person’s bank account. For this, you must put a double-cross line on the upper left corner of the cheque and write “Account Payee Only” or “A/C Payee Only” to make sure the money goes into the account.

#3. Always write the full name of the payee

Avoid writing abbreviations and always write the full name. No shortcuts and short forms here.

#4. Cross out any extra spaces

After writing the name you must remember to cross out any extra spaces between the name by drawing the line.

#5. Must cancel the word “Bearer”

On the top right corner of a cheque, you will see “Or Bearer” written on the cheque, which means the person who bears the cheque or the person whose name is written on the cheque can cash it. By writing A/C Payee on the cheque, the money goes only to the bank account.

It also keeps your cheque safe.

#6. Must mention the exact amount

The amount that you want to pay must be written clearly in figures and in words and you must write only after writing the amount. Yes, you need to spell it out.

#7. Check details before signing

While issuing a cheque never sign a blank cheque, this is the worst mistake you can make, and avoid making signatures that can be easily copied.


How Long Does It Take For A Cheque To Clear?


How long does it take for the bank to process your cheque? When can you get your cash?

At best, you are looking at 2-3 business days for a deposited cheque to clear. At max, it can take up to 5 days.

If you deposit your cheque on Saturday or Sunday it will be sent for clearing on Monday or the next business day.


What Are Bounced Cheques?

When the amount of money written on the cheque is higher than what is held in the checking account, the cheque cannot be negotiated. The insufficient amount due to which the cheque cannot be processed is referred to as a “bounced cheque.”

Payers usually have to pay a penalty fee for the bounced cheque. In some cases, the payee is also charged with a penalty.

Bounced cheques often happen for businesses that run into cash flow issues. To solve their financial issue, they can research a wide variety of business loans to find if any suits them.


How Do I Keep Track Of My Cheques?

1. How do I bank my cheque?

Deposit the cheque at your banks’s ATM and take a photo/video of the process, or with a bank teller. if you have a receipt, always save it.

2. Keep track of your account balance online, this way you know when the cheque is deposited and the account balance immediately, and how much you will have when the check clears.

3. Recheck your account balance one day later, as you know it takes two business days for the bank to clear the deposited cheque but if for some reason your bank doesn’t, they’ll inform you about holding the cheque and will let you know when they release the hold and give you your funds. When the banks are concerned about the clearing of the cheque they might do this.

4. Check your transactions, averse to your monthly statements when it arrives online. Always make sure to see the deposit entry on the statement that measures up the amount you deposited.

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