Checks

Checks

A check (or cheque in British English) is a document that orders a bank to pay a specific amount of money from a person's account to the person in whose name the check has been issued. The person writing the check, known as the drawer, has a transaction banking account (often called a checking account) where their money is held. The person to whom the check is written is the payee, and the bank on which the check is drawn is the drawee.

History

Checks have been used since ancient times. The earliest known checks were used by the Romans in the first century BC. The modern check as we know it today began to take shape in the 17th century in England.

Components of a Check

A typical check contains the following components:

• Date – The date the check is written.
• Payee – The name of the person or entity to whom the check is payable.
• Amount – The amount of money to be paid, written both in numbers and words.
• Signature – The signature of the drawer.
• Memo – A note indicating the purpose of the check (optional).
• Routing Number – A nine-digit number that identifies the bank upon which the check is drawn.
• Account Number – The number of the account from which the funds will be drawn.
• Check Number – A sequential number used to identify the check.

Types of Checks

There are several types of checks, including:

• Personal Check – A check written by an individual.
• Cashier's Check – A check guaranteed by a bank, drawn on the bank's own funds.
• Certified Check – A personal check that the bank certifies as genuine and that there are sufficient funds in the account to cover the check.
• Traveler's Check – A pre-printed, fixed-amount check designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the issuer for that privilege.
• Electronic Check – A form of payment made via the internet that is designed to perform the same function as a conventional paper check.

Check Processing

The process of clearing a check involves several steps: 1. The payee deposits the check into their bank account. 2. The payee's bank sends the check to the drawer's bank. 3. The drawer's bank verifies the check and the availability of funds. 4. The drawer's bank transfers the funds to the payee's bank. 5. The payee's bank credits the payee's account with the funds.

Advantages and Disadvantages

Advantages

• Checks provide a paper trail for transactions.
• They can be used to pay large amounts without carrying cash.
• Post-dated checks can be used to schedule future payments.

Disadvantages

• Checks can be lost or stolen.
• They require manual processing, which can be time-consuming.
• There is a risk of insufficient funds, leading to bounced checks.

Related Pages

• Bank
• Bank account
• Cashier's check
• Certified check
• Traveler's check
• Electronic check
• Payment system
• Financial transaction

See Also

• Credit card
• Debit card
• Wire transfer
• Automated Clearing House