What is a cheque book : some useful points to note

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cheque-book-faqsCheque book is very familiar and essential personal finance stuff for all of us. If you have a bank account then you should have a cheque book. You can fill the form while opening a bank account first time. Having a cheque book will provide lot of facilities to you. Generally there is a limit to withdraw money by ATM card but for cheque book you can go for any amount. Not only that with a cheque you can ensure a safe and secure money transfer. Let’s check out the various facts and usefulness of a bank cheque leaf in our daily life.

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Generally one can withdraw money from a current account and savings account both. Based on bank and credit history there is a limit of maximum transaction bank to bank. A cheque without a date is considered incomplete and is returned unpaid by the banks. A cheque that bears a date earlier than six months is a stale cheque and can’t be claimed for.

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Various types of cheques:

There are many types of chequebook available in every bank. Each type has its own use. Among them few are: bearer cheque, order cheque, non-transferable, crossed cheque/account payee cheque, post-dated cheque etc. Always ask your bank clerk about your requirement and then apply for a cheque-book.

Who can apply for a cheque book :

Anyone who has a valid bank account can apply a cheque book. In fact now while opening a bank account you will get the cheque-book with the initial bank kit. No need to apply for the first time. Onec you have finished the first cheque-book you have to apply for a fresh cheque-book online or by visiting your nearest bank branch.

Advantages of having a cheque-book:

  • You can carry the cheque book instead of cash. For a big payment you can use the cheque. In you account statement you can get the update of encashment details as well.
  • Although internet-banking has become very popular and easy to use but still many people don’t feel comfortable to handle big transactions online. In that case paying via cheque is the safest way.
  • In case of cheque, there is no limit of amount for any payment. As per your balance maintained in your account you can pay as much as you can. You can reissue a cheque book easily from branch or even internet banking.
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Disadvantages/Risks of having a cheque-book :

  • You should always know how much balance is there in your account otherwise if you make a payment greater than your account balance, your cheque will bounce. In that case you have to pay a penalty. Sometimes you have to feel the embarrassment also.
  • Be careful with your signature. Don’t disclose it. Keep your cheque-book in a safe place.
  • Don’t sign a blank cheque for future use. May be you think it will save your time. But if it reaches to someone else by any chance just think what can happen.
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Best practices to follow:

  • Always fill the details clearly. Don’t overwrite any text.
  • Mention the date and amount clearly.
  • Always mention account payee on the top left of the cheque. This will stop cash payment.
  • In the cheque book maintain all the cheque numbers with corresponding details.
  • Don’t use ink pen to fill a cheque. Use only ball pen.
  • After writing the amounts don’t forget to cut the rest of the blank space, so that no-one can put some extra zero after the amount. Anyway you will write the amount in words as well but still better to be careful.
  • While submitting a cheque to a bank, mention your account number and phone number. The bank clerk might need to contact you.
  • Always keep the cheque deposit slip from the bank for reference.

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