For some people checks may seem like an old-school way of making payments. However, the American business community is still heavily dependent on check payments. In this age where payment wallets and online transfers are increasingly becoming user friendly, paying using checks may seem complicated. To give you a brief crash course on all the check types, following are 10 banking terms you should know if you plan on using checks to make payments.
Check Bounce/Bounced Checks: Even though it’s not the official term, a bounced check refers to a check that’s rejected by the bank due to insufficient balance in the check writer’s account. If you write a check that bounces because the linked account is insufficiently funded, banks will reject the check and deduct a fine from your account. A bounced check may also have legal consequences.
Banker’s Checks: A banker’s check also known as cashier’s check guarantees the payment to the bearer. The bank reserves the amount in the check by drawing it out from the account of the person who writes the check. This means if you are giving someone a banker’s check then that person is guaranteed to receive the payment.
Post-dated Checks: The drawer (the person writing the check) can write a date on the check that’s yet to arrive. This practice allows the drawer to ensure that the check is not cleared before a certain date. You would typically write a post-dated check if you want someone to withdraw the money after a certain period. Businesses often write post-dated checks to vendors for goods that are yet to be delivered.
Ante-dated Checks: Opposite of post-dated checks, ante-dated checks have dates that have already passed. Practice caution when receiving antedated checks because some banks have an expiry period within which a check needs to be cashed.
QuickBooks or Intuit Checks: Businesses often use accounting software packages such as Quickbooks and Intuit. One of the many features of these programs is to print business checks. However, certain types of checks are compatible with certain software packages. For example, businesses depend on ordering Intuit check online to go with their Intuit accounting software.
Crossed Checks: Often marked by two parallel lines drawn on the top-left corner of the check, a crossed check cannot be cleared by giving cash to the bearer or the person who presents the check. A crossed check is processed by a banker and the amount is credited to the recipient’s bank account. Simply put, a person cannot present a crossed check at the counter and get the amount in cash.
Open Checks: These checks are uncrossed checks which can be cashed immediately upon presenting them at the counter. There two types of open checks, bearer and order.
Bearer Checks: Bearer checks can be presented at the counter by anyone and cashed at the counter. Also known as bearer draft, these checks do not contain the recipient’s name and is usually marked as “cash”.
Order Checks: Uncrossed order checks instruct banks to check the identity of the person presenting the check before processing the payment.
Self Check: You can write a self check when you wish to draw money out of your own account. With ATMs everywhere, self checking is a practice that’s all but obsolete.