Writing a cheque may seem like a tool of the past when it comes to paying for items or services. Credit cards, debit cards and ATM cards are prominently used to pay for transactions when people decide not to use cash. However, there are different types of cheque with functions that using cards cannot replace.
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The cheque (or "check," as spelt in America) is a paper voucher for money that people use in lieu of cash. Cheques are tools used by people and financial institutions like banks and credit unions that allow the designated amount of money to be withdrawn from a specific account at that institution. As long as the people involved are legal entities, a cheque transaction can occur.
Personal cheques are cheques that typically involve personal accounts and not business or corporation monies. They sometimes have a pre-written name and address of authorised persons who can write the cheques in the upper left corner. In the bottom-right corner is a signature block for the cheque writer, while the lower-left corner has a "memo" line where people can write what the cheque is for. Personal cheques can be either single-sheeted or duplicate cheques. Duplicate cheques make a copy of the original cheque as you write it, making it easier to track for your personal records. This can be done with or without carbon paper. Duplicate cheques are typically more expensive.
The only person who can cash a personal cheque it is the person named on the "pay to the order of" line. That person, however, can sign on the endorsee block on the back of the cheque and allow the bearer to cash it.
A cashier's cheque is one with that is issued by the bank. The funds are usually cleared in the same day as the cheque is written, guaranteeing the amount on the cheque unless the original funds in the account at the time of cheque writing prove to be fraudulent on a later day. With cashier's cheques, the money is immediately drawn out of the writer's account and made available for cashing without any extra processing.The bank's executive officer's signature is also found on these cheques.
Certified cheques are guaranteed cheques by the bank that cannot "bounce" which is when insufficient funds in the account cannot cover the cheque amount. Banks guarantee the money by setting it aside in a special account to cover for the cheque once it is cashed, unlike a cashier's cheque.
Traveller's cheques are prominently used by vacationers to pay for goods and services. Travellers used them especially in foreign countries so that they would not have to carry around a lot of cash to pay for large services like hotel stays. They also have added security should they be lost or stolen. With the advent of credit cards and debit cards, traveller's cheques are used significantly less than they were 20 years ago.