How Many Types of Cheques

Introduction

• A cheque is a piece of paper that you can provide to your bank telling it to give the stated amount in words and numbers to the person whose name is written on the cheque. The term "negotiable instrument" also applies to cheques.

• It is a piece of paper that instructs a bank (or credit union) to withdraw a certain sum of money from a person's account and pay it to the person in whose name the cheque has been issued.

• The person who writes and signs the cheque is known as the drawer, and the person who receives the money is known as the payee.

• The term "negotiable instrument" also applies to checks. A negotiable instrument, as used in banking, is a document that guarantees its bearer payment of the specified sum upon presenting the document to the banker or by a set date.

Components of Cheque

1. Date: Indicate the day now.

2. Write the name of the person or business you are paying under Payee.

3. Check amount in numbers: Enter the sum in numbers.

4. Check amount in words: Indicate the check's amount in words.

5. Name: This page contains a printout of your personal data.

Features of A Cheque

1. The drawer must properly write a check and sign it.

2. A check contains an unconditional order.

3. Only one bank is eligible to receive checks.

4. The defined quantity should always be certain and indicated in words and numbers.

5. There is always a specific payee on checks.

Types of Cheques

1. Bearer Cheque: EARER CHEQUE: A bearer check is one that pays the person who is holding the check or carrying it. These checks can be transferred by delivery, meaning that you can receive payment if you bring the check to the bank. The banks can make the payment without further authorization from the issuer.

2. Crossed Cheque: Checks with two sloping parallel lines and the phrase "a/c payee" inscribed on the top left may have been seen. It looks like a crossed check. The lines guarantee that, regardless of who presents the check, only the person whose name is written on it—the account payee together with his or her account number—will receive payment. Due to the fact that they can only be cashed at the drawee's bank, these checks are relatively safe.

3. Post Dated Cheque: These checks feature a future date of redemption. The bank will only process the payment on the date specified in the cheque, even if the holder submits this check to the institution right away after receiving it. This check is good after the specified date but not before.

4. Order Cheque: These checks have the phrase "or bearer" crossed out. Only the person whose name is on the cheque may receive such a check, and the bank will do its background investigation to verify the check bearer's identification before making the payment.

5. Open Cheque: In essence, an open check is one that has not been crossed. Any bank will cash this check, and the person holding the check will receive the money. The original payee (the person who received the payment initially) as well as another payee may transfer this check. The cheque must have the issuer's signature on both the front and back.

6. Stale Cheque: A stale check is one that has expired, three months after the day it was issued.

7. Traveler Cheque: Instead of carrying bulky hard currency when on vacation, foreigners carry traveler's checks. They receive these checks from one bank, which they can cash in for cash at another bank that is situated in a different city or nation. Traveler's checks are valid for future journeys and have no expiration date.

8. Banker's Cheque: These types of checks are issued by banks. These checks are written by the bank on behalf of the account holder to pay a recipient in the same city. Here, the customer's account is debited for the stated amount, and the bank subsequently issues the check. Banker's checks are referred to as non-negotiable instruments for this reason—banks cannot refuse to honour them. The period of validity is three months. If certain requirements are met, they may be revalidated.

9. Self Cheque: Self-pay cheques can be identified by the word “self” placed in the drawee column. Only the issuing bank is permitted to draw on self-cheques.

Conclusion

• Cheque is an instruction on a specifically printed form to a bank to pay a specified amount from the drawer's account.

• The "drawer" is the person who writes the check, and the "payee" is the person in whose name it has been issued. A check will have the required transfer amount, the payee's name, the date, and the drawer's signature.

• There are different types of cheques. They include bearer, order, crossed, account payee, stale, self, traveller's, blank, and mutilated checks.

• Checks can be used to mail in payments for invoices.

• They are practical and simple