A bank check is just a slip of paper, which usually has a counterfoil, that is provided by a bank to a person or a corporate body. For the time the check is blank – in other words none of the boxes have been filled in – the check is valueless. When the completed personal check has a signature it becomes payable. In effect the check now places a commitment on the bank to honor it upon two conditions:
a. The signature of the person who signs the check must tally with the example held by the bank
b. There must be sufficient funds deposited in the account to cover the face value of the bank check.
The principal purpose of both business checks and personal checks combined with the properties of checking accounts is to facilitate the simple transaction of trade whereby goods are exchanged for cash. This is barter in a modern form! The trend towards a cashless world society is growing however as checks begin to take a back seat to the march of the credit card.
Designs for personalized checks are becoming more entertaining as they include many themes and characters. Whatever the designer checks may be, it is still necessary for them to display some important regulatory information. In particular the check must clearly show the name and address of the bank that issued the checks and holds the account, the unique number of the bank account and the routing or sort code for the particular branch of the issuing bank. When you order checks you will need to be aware of these things.
Without doubt, designer checks are becoming very fashionable. It does not seem to matter whether it is cheap checks or costlier ones, they can still be very amusing and entertaining. There are a number of favorite themes which seem to recur regularly – particularly Disney characters and other cartoon favorites.
It is incumbent on banks to set in place anti-fraud systems and procedures. Some of these are simple and most of us complete our personal checks without realizing we are invoking these procedures – eg the writing of the sum to be paid in prose as well as in figures, as well as writing in the name of the payee. Clearly the correct signature on the check is another very important aspect. But rest assured that if the check is completed properly, the issuer will be going a long way to ensuring he or she is not defrauded.
The reader should be aware that in banking terms there are variants on the personal check which are used to describe its status. For example:
1. Drawn Check – the name given after an issued check has been cashed.
2. Blank Check – the bare personal check as it sits waiting in your checkbook to be completed.
3. Bearer Check – a means of paying cash directly to the person presenting the check.
4. Crossed Check – two parallel lines are displayed running either diagonally or vertically across the face of the check. These limit the way the check can be processed by the bank and act as a further safeguard against theft.
5. Certified Check – a check which carries a bank guarantee.
6. Order Check – normally the payee receives this directly from the person making payment with his or her name on the front of the check.
7. Bounced Check – a check dishonored by the bank due to lack of funds in the account.
The beauty of bank checks is that they allow a simple way to transfer funds from one party to another, and this is further facilitated by the process of endorsement whereby the original payee signs the back of the check signifying that the value of the bank check can now be paid directly to the person presenting it.
The flexibility offered by personal checks is one of the wonders of the modern financial world, and all should be encouraged to open a bank account and use this system to its full advantage.