Owning a checkbook sometimes makes life easier, but checks can be finicky beasts. Not knowing how to write a check correctly can actually cost you money: you may be penalized for late payments if it can’t be processed quickly, banks charge a “returned check” fee (about $35 for Bank of America) and, if you make out a check to pay your rent each month, one not clearing will damage your landlord’s trust in you. Banks even charge you for depositing a check that turns out to be invalid through no fault of your own!
Clearly, proper check writing, even when the amount involved is relatively small, is more important than many people realize. Given how much money nationwide banks make every time a client commits an error, it’s probably not surprising that some of them don’t bother to properly educate the public on how to write a personal check. We here at ProMoneySavings.com, on the other hand, make it our business to help you take back control of your money, whether this means providing you with a guide on major financial decisions or just explaining everyday paperwork.
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Filling out a Check: Example of Doing It Right
Examples of cheques have been around since classical times in one form or another. Their basic format has changed remarkably little over the years:
If you’re able to fill out a money order, you’re already well on your way to knowing how to fill out a check properly. Just take a look at the following example of writing a check:
Most of the items of information you’re required to provide are pretty self-explanatory and some, like your address and that of the bank, will already be printed for you. Still, there are a few wrinkles you should know about:
1 – Payee Name: Any clear and unambiguous description of who is allowed to cash the check should do. This means that, if you are paying a person, you have to specify both their first and last names or the full name of a company. A spelling mistake here will probably mean that the check will be returned to you without being processed.
You can also put down Cash, but doing so is somewhat risky, especially if planning to send the check by mail – this allows anyone who gets their hands on it to claim the funds.
2 – Date: Either the current date or for a postdated check, someday in the future after which you want the check to be cashed. Note that postdating a check doesn’t guarantee that the bank won’t honor it before the date you write unless you specifically request this.
If sending a check abroad instead of using a wire transfer or money order, keep in mind that other countries have different requirements. In particular, people outside the U.S.A. tend to write the date as Day/Month/Year, from small to large, so write out the name of the month to be sure.
3 – Payment Amount: Jot down the amount you want to pay in numbers, including a decimal point and cent figure. The same number has to be written out in words below the recipient’s name. Many people don’t know how to write out a check with cents: rather than having to spell it out in longhand, you can state this as a fraction out of a hundred. If writing an amount without cents, you can make this clear by writing (for example) “Two hundred dollars only” or “Two hundred dollars even”.
4 – Memo: This field is usually optional; it’s simply a place to remind the payee what the money is for: “Car repair”, “For rent”, etc. If you’re paying a utility bill by check, you’ll want to write your account number in this space.
5 – Signature: It’s very important to know how to sign a check, in the same way, every time. If your signature isn’t identical to the one the bank keeps on file, the check will be refused as possibly fraudulent. This may mean that you have to practice signing your name when you get your checkbook and possibly register a new sample signature at your local branch.
This is all there is to the correct way to write a check. If you make a mistake at any point, don’t try to scratch it out: simply write VOID prominently across the front and start over.
More Tips About Checks
Checks are no longer as popular as they used to be due to the rise of convenient, secure electronic alternatives. So, before worrying too much about how to write a check to someone, you might want to ask yourself whether you actually need to pay for a service you might never use. You can easily send payments to both individuals and companies, schedule payments in advance and find your bank routing number without checking facilities, so a checkbook may be no more than a boondoggle you don’t need in your life. If you do for some reason need to pay for something by cheque, you can always get a cashier’s check at your bank.
Speaking of future payments, it’s important to understand that writing checks in advance, i.e. postdating them, is more a matter of tradition than law. When taking out a payday loan, for instance, you might be required to provide the lender with a postdated check to serve as a kind of security, but there’s no real guarantee that your checking account will have sufficient funds by that day or even still be open. Contrariwise, unless you’ve made special arrangements with your bank, the recipient can easily cash it before the date you’ve written: a check becomes valid as soon as it is signed. The only time a bank will refuse to honor a check based on its date is if more than approximately five years have elapsed since it was written.
If you use checks often, you’ll be glad to know that there’s absolutely nothing compelling you to order these from your bank. Online third-party suppliers tend to be cheaper, and in fact, are often the same companies that print branded checks for the banks in any case.
Apart from how postdated checks actually work, another common misconception is that you can use checks to effectively create money for nothing, at least temporarily. The basic idea is that you “pay” someone by check without the money being immediately debited from your account, giving you a little bit of breathing space. This is called “playing the float”, or check kiting when it’s done specifically to commit fraud.
Legally speaking, you’re supposed to have sufficient funds in the bank at the moment you sign any check and keep it there until it’s cashed. If you don’t, your credit rating may suffer, you will be slapped with penalties from your bank and you may even be sued. In any case, the delay between someone receiving and processing a check is very short these days: with most banks accepting checks (even government stimulus checks) in electronic format, cashing one is as simple as taking a picture of it.
The Importance of Updating Your Check Register Every Time You Make out a Check
Unlike with a credit or debit card, there’s nothing stopping you from writing a check for money you don’t have. This means that part of the correct way to write a check is knowing that the funds in your account can cover your expenditures. Not doing so can have a variety of unpleasant consequences, ranging from annoyed shopowners to being charged with fraud.
This is why you need to put on your accountant hat and keep a check register in your pocket, either a paper one supplied by your bank or an app. Jotting down every incoming or outgoing transaction made on the account, whether this takes the form of writing checks, using a card, depositing cash or whatever lets you balance your checkbook and know where you stand at all times.
Doing this has another benefit, too: it lets you track your personal financial situation in real time. Seeing how money flows into and out of your bank account helps you to get a gut feeling about how well you are doing at budgeting and can by itself improve your spending habits.
Tips to Avoid Checking Scams
Check fraud does happen, unfortunately. Payment options like credit cards and electronic transfers are a little more secure, but in case you believe that using a physical object with your name on it is more stylish, there are a couple of things you can do to limit the risk:
- Criminals sometimes “wash” checks in a solution that erases ordinary ball-point pen ink. You can prevent this from happening using special pens.
- Draw a line through any remaining empty space on the “Pay to the order of” line to stop someone changing the cheque amount from, say, “thirteen” to “thirteen hundred”. When writing the amount in numbers, make sure to start right next to the dollar sign so no-one can sneak in an extra digit.
- If a check gets stolen or lost in the mail, it is possible and highly advisable to cancel that check using its serial number at your bank. This will unfortunately have no effect if it has already been cashed.
- A locking mailbox can help to keep your mail from disappearing and potentially stop thieves from gaining access to your bank statements, examples of your signature and even entire checkbooks.
- Review your check register and bank statements regularly. Con artists are experts at covering their tracks, so noticing an irregular transaction only long after the fact makes it very difficult for you to get any kind of redress.
The Bottom Line
Checks may seem a little old-fashioned, but there are still a couple of advantages to using them. Transaction charges are low, they work even when the power is out and at businesses without a credit card reader, and there’s always a paper record of who paid whom, when.
Proper check writing is unfortunately something of a lost art. Making small but significant errors can be embarrassing, but this is easy to avoid. There’s really only one correct way to write a check, and once you’ve practiced doing it a few times, you’ll never forget how.