A cheque is a paper payment agreement that allows a bank to take a predetermined amount of money from the payee’s bank account and deposit it into the beneficiary’s bank account.
Although cheques are less popular than other forms of payment, they’re still widely used and accepted nationwide. If you’re writing a cheque for the first time, you might find following this step-by-step guide useful.
How to write a cheque in 5 steps
- Start by writing the date in the top right corner. You may see a dd/mm/yyyy format indicating the order in which the date, month and year need to be entered. Note that cheques are only valid for six months, after which point they can no longer be cashed. You also can write a date in the future to draft a post-dated cheque, which cannot be cashed until that date.
- Write the name of the beneficiary, or who the cheque is for, such as a person, an organization or a business. By writing the beneficiary’s name on the line that says “Pay to the order of,” you can ensure that no one else cashes the cheque.
- Enter the amount of money that the cheque is for in two places. First, write the amount in numbers in the box under the date. Then, on the line under the beneficiary’s name, write out the dollar value of the cheque in words, like “one hundred” or “fifty-three.” You can use numbers to indicate values under 100 cents, like “27/100.” Make sure you draw a horizontal line before or after the amounts in the box to take up any leftover space so that nobody can add extra numbers to forge a larger amount.
- Write the purpose of the cheque under “memo.” This is an optional step, but it can be helpful in case there’s an argument about what you’re paying for.
- Sign the cheque on the line in the bottom right corner.
Nerdy Tip: Always use permanent 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.
How to use cheques
You can use a cheque as a secure mode of payment. You’ll simply fill it out and give it to the beneficiary by hand or send it by mail.
Then the beneficiary will deposit the cheque in their bank account at their bank, at an ATM, or by using a banking app on their smartphone. At this point, the cheque needs to clear, meaning that 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 about four to eight business days.
Before you write a cheque, make sure you have enough money in your account to make the payment or 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.
Order cheques from your bank
Many traditional banks offer a complimentary cheque book with select chequing accounts when you open a new account with them. If you don’t have a cheque book, you may need to pay a fee to place an order for cheques using online banking or by visiting the nearest bank branch.
Void a cheque
To void a cheque, simply print “VOID” across your bank cheque before handing it to the third party who needs it to verify your bank information to set up a direct deposit to your account. Writing “VOID” on your cheque ensures that it can no longer be used to draw payment from your account.
Additionally, knowing how to read a cheque can help you find your transit, institution, routing and account numbers when you’re setting up direct deposits or automatic payments from your bank accounts.
If you need a void cheque but don’t have a cheque book, you can use online banking to download a void cheque for a specific bank account via the banking portal or mobile app.
Stop payment on a cheque
If you need to stop the cheque from being processed 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.
Alternatives to writing cheques
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:
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.
Tips for avoiding cheque fraud
Cheque fraud is, unfortunately, a possibility. Scammers can steal cheques that are written to you, or even steal your blank cheques and forge your signature. Here are some tips to help you avoid fraud in Canada:
- Make sure to write out your cheques by entering all the accurate information in full, without leaving any blank spaces.
- Keep your blank cheques in a safe and secure location.
- Keep an eye on your bank account statements and balances. If anything seems off, get in touch with your bank immediately.
- Shred any leftover cheques after you close a bank account.
A cash advance is a short-term cash loan — an expensive one — taken against the credit line on your credit card. It includes ATM withdrawals, balance transfers, lottery tickets and more.
Setting up direct deposit is usually fairly simple. First, you need a direct deposit form. Fill out your account info, attach a void cheque or deposit slip, and then submit it to your manager or payroll department.
A bank statement is a document that shows you a summary of the money that went in and out of your account during a set period of time. Check it for errors, fees and any interest earned.
A chequing account is a bank account for everyday expenses. You can have your paycheque deposited directly into it and use it to pay bills, make purchases and withdraw cash.