Every person with a bank account should know a few essential rules about using a chequebook. Without the right knowledge, someone could easily fall into the trap of fraud or financial loss. To keep your money safe, it’s important to use your cheques wisely and understand how they work.
Signing a cheque is more than just putting your name on paper. Where and how you sign matters a lot. If you sign the back of a cheque and hand it over to someone else, you might be risking your own money. That’s why it’s important to know exactly when and to whom you should give a cheque. Being careful can help you avoid unnecessary trouble.
A cheque is a powerful tool. It’s a written instruction to your bank to pay a specific amount from your account to someone else. Banks see cheques as a safe and convenient way to move money, but only if you use them properly.
Not all cheques are the same. Some cheques require a signature only on the front, while others—like bearer cheques—are signed on the back. Bearer cheques are unique because they don’t have anyone’s name written on them. Anyone who holds the cheque can cash it at the bank. Because of this, bearer cheques are riskier. If you lose one, anyone can use it to take money from your account. The bank won’t take responsibility for any fraud that happens with a bearer cheque.
Here are a few important things to remember about cheques:
- Account Types: You can issue a cheque from either a savings or a current account.
- Payee’s Name: Only the person whose name is written on the cheque can cash it, unless it’s a bearer cheque.
- Date is Essential: A cheque without a date is not valid.
- Validity Period: A bank cheque is valid for three months from the date it’s written.
- MICR Code: At the bottom of every cheque, there’s a nine-digit MICR code that helps the bank process the cheque quickly.
- Amount in Words and Figures: Always write the cheque amount in both words and numbers to avoid confusion or fraud.
- Clear Signature: Sign the cheque neatly, without any mistakes or overwriting.
- Correct Name: Make sure the name of the person receiving the money is spelled correctly.
By following these simple guidelines, you can use your chequebook safely and confidently. Always double-check your cheques before handing them over, and keep your money secure!
