Writing a cheque is an easy, fill-in-the-blank process. Once you get the hang of it, it’s like riding a bike. But if you are filling out a cheque for the first time, you might feel most comfortable following these steps:
Always use blue or black ink when you’re writing a cheque. Don’t use a pencil — someone could erase the information you wrote and add their own name and amount!
If you are using a cheque to make a payment, fill it out by following the steps above. Then give it to the beneficiary by hand or send it by mail.
The beneficiary will deposit the cheque in their bank account. They can do this in person at their bank, at an ATM, or by using a banking app on their smartphone. At this point the cheque needs to clear; the bank needs to ensure that it’s legitimate and that you have enough funds in your account to make the payment. The clearing process typically takes a couple of days, but many banks will advance the money immediately so it shows up in the beneficiary’s account.
Sometimes, the bank may place a hold on the cheque. This might happen when the bank is unsure whether you have sufficient funds in your account to actually make the payment. A hold also protects the beneficiary from spending money that isn’t actually available in their account. In Canada, the maximum hold time is four business days.
If you don’t have enough money in your account to make the payment, the cheque will bounce. In this case, the funds will be removed from the recipient’s account and you’ll be charged a non-sufficient funds fee. You’ll also still need to make the payment, and depending on the beneficiary, you may be charged a late fee.
If you need to stop the cheque from being deposited after you’ve sent it, you can request a stop payment from your bank. You’ll need to give the bank all the information you wrote on the cheque, and most banks charge a fee for this service. Your request has to be processed before the cheque has been deposited, and if it’s not completed in time, you’ll need to contact the beneficiary to ask for a refund.
Cheques aren’t nearly as popular as they used to be, thanks to technological advances. Many people are becoming more comfortable with other payment methods such as online payments, credit cards, direct deposit, and money transfers via online banking. These methods are much quicker than mailing a cheque and require very little work on both ends. Plus, most of these alternatives offer a lower chance of fraud and more protection in case of any issues.
Cheque fraud is, unfortunately, a possibility. Here are some tips to help you avoid cheque fraud:
Hannah Logan is a writer and blogger who specializes in personal finance and travel. You can follow her personal travel blog EatSleepBreatheTravel.com or find her on Instagram @hannahlogan21.