Here’s a rundown on how to write a check and handle a checking account that could keep you from being what once was called a “paperhanger” – a person who passes bad checks. A properly written check, one backed by money in the bank, is a written order directing a bank to pay the sum shown on the face of the check to a person or organization.
Use of a checking account has several advantages over cash. You can avoid carrying large sums of money with you, or hiding money in your room. Checks provide an automatic receipt useful as a legal document. The account provides a record of payments, and checks can be sent safely through the mail. Trouble can come when you don’t have enough money in your checking account to cover your checks. That can lead to loss of check-cashing privileges, administrative punishment, and even separation from the service. To avoid having that happen, there are some basic things you need to know.
First, there are three parties to a check: the drawer – the person who writes a check and signs it; the drawee – the bank on which the check is drawn, and the payee – the person to whom the check is made payable.
Writing the check
1. The check number: If your checks are not already numbered, be sure you number them. Without numbers it is difficult to keep records, and to balance your checkbook. Write the check number on your record page, too.
2. The date: A check may be dated on a Sunday or holiday, but do not write a future date on a check. Banks are not allowed to pay such checks.
3. The payee: Always make out a check to a specific person or company (the payee). Don’t make out a check just to cash, except at a bank. Such a check can be cashed by anyone.
4. The amount: If the amount of the check differs from the amount spelled out, the spelled out amount is considered correct. Sometimes, however, the bank will choose not to accept the check. To guard against alterations, put the figure right next to the dollar sign and start the written amount as close as possible to the left margin. Fill out the unused space with a line.
5. The signature. You should write it exactly as you have at the bank when you opened the account. Never, by the way, sign a blank check. Someone could write in any figure and you would have to pay.
6. MICR symbols: These are pre-printed magnetic ink symbols that can be read by automatic machines. The left-hand series is the American Bankers Association transit routing symbol. The second group is your account number.
Endorsing a check
Before depositing a check which is drawn to your order, or before transferring it to another person, you must sign it on the back. This is called an endorsement. An endorsement is the handwritten signature of the person receiving the check. There are several kinds of endorsement:
1. A blank endorsement – requiring merely your signature – allows you to cash or deposit the check to your account. If the check is lost, however, anyone who finds it can cash it. If your name is misspelled or incomplete on the face of the check, write your first endorsement in the same incorrect way. Underneath it, sign your name as it should be – the signature you normally use on bank documents.
2. A special endorsement – here you endorse the check to another person, which permits this person, after also signing, to cash or deposit the check.
3. A qualified endorsement (without recourse) transfers title to a check, without making the endorser responsible for payment of the check.
4. A restrictive endorsement specifies what is to be done with the check and, therefore, limits further endorsement and controls final payment. Keep in mind that when you endorse a check and deposit it to your account the money won’t be available immediately. The check must be sent to the bank which has the account against which the check was originally written. If that bank is in another town, it may take a few days for the money to be placed in your own account. Ask at your bank how long it will take, so you will know exactly when you can write a check against the deposit.
Never borrow or lend a personal check. No matter how carefully you cross out the original titles and numbers, the machines that process the account will still read the original printing. This means that if you let someone else use your check, the money may be drawn out of your account, no matter what your intentions. Always use your own checks, or a blank check, if necessary.