money cash cheque

​Understanding cheques

A cheque lets you make a payment from your bank account. Find out how it works and how to keep track of your money.

Key takeaways

  • Make sure you have sufficient funds in your account for the cheque amount.
  • Cross your cheques to ensure that only the payee can deposit them.
  • Record and track all your cheque transactions and tell the bank if there are discrepancies.

What is a cheque?

A cheque is a paper instrument that orders a payment of money from a bank account. When you write a cheque, you’re the payer, and the cheque receiver is the payee.

Cheques are generally valid for six months from the date written on the cheque unless a shorter period is otherwise stated on the cheque.

How long cheques take to clear

When you deposit a cheque into your account, your bank will send an image of the cheque to the payer’s bank. The purpose is to collect the cheque amount for crediting into your account. This process is called cheque clearing.

Things to note:

  • Cheques are cleared from Mondays to Fridays only. The cheque deposit cut-off time is usually at 3.30 pm.
  • Cheques deposited on Saturdays and Sundays will be sent for cheque clearing on Mondays or the next business day.
  • Cash cheques can be encashed on Saturdays at the payer’s bank. A handling fee may apply.

Writing a cheque

When writing a cheque, take note of the following:

Make sure you have sufficient funds

If you don’t have enough money in your account, your cheque will be rejected. You may have to pay fees, including:

  • Handling or administrative fee for the return of the cheque
  • Overdraft interest to cover the bank’s loss in overnight interest

Cross your cheque appropriately

For a payee only (non-transferable) cheque:

  1. Cross the cheque by drawing two parallel lines across the top left-hand corner of the cheque.
  2. Cancel “or bearer” on the cheque and add “Account Payee Only” (or “A/C Payee Only”).

Note: If the cheque is crossed with only two parallel lines but without cancelling “or bearer”, it can be deposited into anyone’s bank account.

For a cash cheque:

  • Don’t cross your cheque
  • Don’t delete the words “or bearer” on the cheque
  • Don’t add the words “Account Payee Only” (or “A/C Payee Only”)

Write the payee’s name clearly

Use dark permanent ink and cross out any extra space after the name by drawing a line.

Write the correct amount.

  • Pen the amount in words and write “only” after that. Cross out any extra space by drawing a line
  • In the box, but the amount in the figures. It should be the same as the written amount.
  • The decimal point must be seen.
  • Do not use a backslash (/) in place of the decimal point as it can be misread as “1.”
  • Use a comma when writing large numbers, e.g. $10,000

Check all details before signing

  • Never pre-sign cheques.
  • Avoid using signatures that are simple and easily forged
  • If you alter your cheque, sign in full against the alteration
  • If there is more than one alteration, issue a new cheque to avoid confusion

Avoid writing post-dated cheques

Post-dated cheques cannot be cleared immediately. Processing charges will apply if the cheques are returned.

If you want to stop a payment

Tell your bank immediately. You can only stop payment of an issued cheque if it has not been cleared or cashed out. The bank may charge an administrative fee.

What if a cheque is returned unpaid?

If you are a payee…

You will not receive payment. Instead, your bank will send you an image return document (IRD) of the cheque and a Return Cheque Advice with instructions on whether you can present the IRD again to the same bank for clearing.

If you can’t present the IRD for clearing, you should return the IRD to the payer and ask for a new cheque.

If you are a payer…

The cheque you wrote will not go through if you don’t have enough money in your account. You will have to pay a handling or administrative fee for the return of the cheque and overdraft (OD) interest charges to cover the bank’s loss in overnight interest.

For example, if the payer writes a cheque for $1,200 when he has only $1,000 in his account, he will be charged overnight OD interest on $200 when the cheque is presented.

Note: The payer’s account will automatically go into OD due to insufficient funds, regardless of whether he has a pre-arranged OD facility. Interest charges could apply.

Please contact your bank for details.

How to keep track of your transactions

Make a record of every cheque you write in the cheque counterfoil (or cheque register of your chequebook. This can help you keep track of the total amount you have paid out. Check these transactions against your bank statements as soon as you receive them.

If you spot any discrepancies, notify your bank immediately. Or within the period required by the bank.

Crossed Check

What Is a Check?

A check is a written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer. The person or entity registering the check is known as the payor or drawer, while the person to whom the review is written is the payee. The drawee, on the other hand, is the bank on which the check is drawn.

Checks may be cashed or deposited. When the payee presents a review to a bank or other financial institution to negotiate, the funds are drawn from the payor’s bank account. It is another way to instruct the bank to transfer funds from the payor’s statement to the payee or the payee’s account. Checks are generally written against a checking account, but they can also negotiate funds from a savings or other type of account.

In some parts of the world, such as Canada and England, the spelling used is “cheque.”


  • A check is a written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer. 
  • It is another way to instruct a bank to transfer funds from the payor’s account to the payee or that person’s account. 
  • Check features include the date, the payee line, the amount of the check, the payor’s endorsement, and a memo line.
  • Types of checks include certified checks, cashier’s checks, and payroll checks, also called paychecks.

How Checks Work

A check is a bill of exchange or document that guarantees a certain amount of money. It is printed for the drawing bank to give to an account holder—the payor—to use. The payor writes the check and presents it to the payee, who then takes it to their bank or other financial institution to negotiate for cash or to deposit into an account.

The use of checks allows two or more parties to make a monetary transaction without actually exchanging physical currency. Instead, the amount for which the check is written is a substitute for the physical money of the same amount.

Checks can be used to make bill payments, as gifts, or to transfer sums between two people or entities. They are generally seen as a more secure way of transferring money than cash, especially when large sums are involved. If a check is lost or stolen, a third party cannot cash it, as the payee is the only one who can negotiate the check. Modern substitutes for checks include debit and credit cards, wire transfers, and internet banking.

 The use of checks cuts out the need for one party to transfer a large sum of physical cash to another party.

History of Checks

Checks have been in existence in one form or another since ancient times. Many people believe a type of check was used among the ancient Romans.1 While each culture that adopted a state of the review had its system, they all shared the basic idea of substituting the bill for physical currency.

In 1717 the Bank of England was the first organisation to issue preprinted checks. The oldest American check dates to the 1790s.

Modern checks, as we know them today, became popular in the 20th century. Check usage surged in the 1950s as the check process became automated, and machines could sort and clear checks. Check cards, first created in the 1960s, were the precursors to today’s debit cards.4 Credit and debit cards—and other forms of electronic payment—have since overshadowed checks as the dominant means of paying for most goods and services. Reviews are now somewhat uncommon but still used among the general population.

Check Features

While not all checks look alike, they generally share the same vital parts. The name and contact information of the person writing the check is located at the top left-hand side. The name of the bank that holds the drawer’s account appears on the check as well.

Several lines need to be filled in by the payor:

  • The date is written on the line on the top right-hand corner of the check.
  • The payee’s name goes on the first line in the centre of the check. This is indicated by the phrase “Pay to the Order Of.”
  • The check-in a dollar figure is filled out in the box next to the payee’s name.
  • The amount written out in words goes on the line underneath the payee’s name.
  • The payor signs the check on the line on the bottom right-hand corner of the bill. The statement must be signed to be considered valid.

There is also a memo line on the bottom left-hand corner of the check underneath the drawing bank’s information. The payor may use it to fill in any pertinent information, such as a reference number, an account number, or any other reason for writing the check.

A series of coded numbers is found along the check’s bottom edge, directly underneath the memo line and the payor’s signature line. These numbers represent the bank’s routing number, the payer’s account number, and the check number. In certain countries, such as Canada, the routing number is replaced with an institution number representing the bank’s identifying code—and the transit or branch number where the account is held.

The back of the check has an endorsement line for the payee’s signature when the bill is negotiated. The receiving bank stamps the back with a deposit stamp when it is arranged, after which it goes for clearing. Once the drawing bank receives the check, it is stamped again and filed. In some cases, the bill is sent back to the payor if they request it.

piggy bank

Types of Checks

Checks can be used for several different purposes.

Certified check

One example is a certified check, which verifies that the drawer’s account has enough funds to honour the amount of the bill. In other words, the statement is guaranteed not to bounce. To certify a check, it must be presented at the bank on which it is drawn, at which time the bank will ascertain its authenticity with the payor.

Cashier’s check

A cashier’s check is guaranteed by the banking institution and signed by a bank cashier, which means the bank is responsible for the funds. This type of check is often required in large transactions, such as buying a car or house.

Payroll check

Another example is a payroll check, or paycheck, which employer issues to compensate employees for their work. In recent years physical salaries have given way to direct deposit systems and other forms of electronic transfer.

Bounced Checks

When someone writes a check for an amount more significant than what is held in their checking account, the bill cannot be negotiated. This is referred to as a “bounced check.” The check bounces because it cannot be processed, as there are insufficient or non-sufficient funds (NSF) in the account (the two terms are interchangeable). A bounced check usually incurs a penalty fee to the payor. In some cases, the payee is also charged a fee.

How to Void a Check

There are several reasons why you may need to void a check

Writing out paper checks is less common these days, as more people manage their finances online and opt for electronic checks instead. For instance, 55% of Americans say they prefer to pay bills online. And nearly 93% of Americans are paid via direct deposit rather than with a physical paycheck.

Setting up those types of transactions means mastering a relatively simple financial skill: voiding a check. If you don’t know how to do it, read on.


  • The avoided check may be necessary to set up direct deposits, automated clearing house (ACH) transfers, or electronic bill payments.
  • Voiding a check means it can’t be used to make a payment or otherwise withdraw money from your checking account.
  • The process for voiding a check is straightforward.
  • If you don’t have checks, there are other steps you can take to set up direct deposit or electronic payments.

How to Void a Check

Voiding a check isn’t that difficult. Here’s what you have to do, step by step:

  • First, get a blue or black pen.
  • Next, write “VOID” in large letters across the front of the check, or write “VOID” in smaller letters on the dateline, payee line, amount line, and signature line, as well as in the amount box.
  • Make a copy of the voided check for your records and note the check number in your registration if you keep one.

That’s all there is to it. Once you’ve voided the check, it can no longer be used to make payments.

Reasons for Voiding a Check

There are several scenarios in which you might need to void a check, some of which have already been mentioned. Here are the most common procedures you may need to know how to cancel a statement to recap.

  • To set up direct payments. Voiding a check may be necessary if you want to schedule electronic payments, either for personal use or running a business. For example, if you have a business and your vendors prefer to be paid electronically, then voiding a check may be part of the process to set up automatic payments.
  • For direct deposit. Direct deposit can help you get paid faster, but your employer needs certain information from you to get it started, including your bank account number and bank routing number. Voiding a check is a simple way to provide those details.
  • Regular bill payments. If you want to pay your mortgage, car loan, or other bills online, then you may have to submit a voided check to schedule payments from your checking account.

Keep in mind that voiding a check may also be necessary if you’re writing a review and make a mistake. For example, if you write the wrong dollar amount, you’d have to void the check to keep the person or business you write it out to from cashing or depositing it.

It’s important to note that you can’t void a check once you’ve given it to the payee. At that point, the only way to stop the bill from being cashed or deposited is to request a stop payment from your bank, which may involve a fee.

 You can’t void a check once you’ve given it to the payee.

If You Don’t Have Checks

Not every checking account offers checks. Chase, for example, is one of the larger banks offering checkless checking. 

These types of accounts may appeal to unbanked and underbanked individuals, who represent 6.5% and 18.7% of American households, respectively, according to the most recent FDIC survey, which dates back to 2017.

If you have a checking account that doesn’t offer checks, you can try these options for setting up direct deposit or electronic payments.

  • Use a deposit slip instead. Deposit slips should also have your routing number and bank account number, and this could be an option if your bank offers them.
  • Submit banking details online. If you’re trying to set up online bill payments, you may be able to do that through your online banking access, with no voided checks or paper forms required.
  • Ask the bank for a starter check. Your bank may be able to print you a starter or sample check with your routing number and bank account number that you could use for voiding purposes.
  • Get other documentation from the bank. If you can’t use a deposit slip or starter check, your bank may be able to provide you with an official letter with your routing and account number that you could use in place of a voided check.
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