Chapter 27

Using ChecksAnd

Other Payment Methods

Check Writing Procedure Elements of a Check

Drawer - is the owner of the account and the person who signs the check.

Payee – is the person to whom the check is written.

Drawee – is the bank or other financial institution that pays the check.

Writing a Check Step 1 – write checks in order by

number. Step 2 – write the proper date in the

proper place on the check. Step 3 – Write the payee’s name on the

line following “Pay to the Order of.” Step 4 – Write the amount of the check

in figures after the dollar sign so that a dishonest person cannot insert another number between it and the amount.

More Steps for Writing a Check Step 5 – write the amount of dollars in

words on the line below the payees name. Write the cents in figures as a fraction of a dollar.

Step 6 – Write the purpose of the payment on the line at the bottom of the check.

Step 7 – Sign your checks with the same signature that you wrote on your signature card.

Tips for Good Check Writing Write checks only using the forms

provided by a bank. Write checks in ink. Only write checks if you have the

money in your account to cover them. Overdrawing – writing a check for more

money than is in the account. Use the current date.

Postdated Check – a check dated later than the date on which it is written.

More Tips for Check Writing Avoid making checks payable to cash

or the bearer. Always fill in the amount of the check. Void checks on which you make

errors. Record every payment from your

checking account, whether the payment is by check or EFT.

Stopping Payment On A Check Stop-Payment Order –

The form instructing a bank not to pay a certain check.

This is another thing in which banks charge a substantial amount for, so only stop payment on a check for a good reason. If a check is lost or stolen, make sure to sure to stop payment on that check before writing a new one.

Other Types of Checks Certified Check – a personal check for

which a bank has guaranteed payment. The certification is stamped on the face of the check and is signed or initialed by a bank officer.

Cashier’s Check – a check that a bank draws on its own in-house funds. These banker’s checks are more acceptable than the personal checks of an individual whom the payee may not know.

One More Type of Check Traveler’s Check – a form designed

for the traveler to use in making payments. Traveler’s Checks are useful so that

there is no need to carry a large amount of cash around while traveling.

Also, when traveling, it is rare for someone to accept your out of area personal check.

Money Orders Money Orders – a form of payment

that orders the issuing agency to pay the amount printed on the form to another part. When purchasing a money order, you

pay the issuing party the amount of the payment you want, plus a service charge.

Different Types of Money Orders

Bank Money Orders – the entire form is completed by the bank, and everything is filled in for you.

Postal Money Orders – The amount of the money order is filled in by the clerk, and the payee’s name, your name and address, and the purpose of the money order need to be filled in by you

Two Other Types of Money Orders

Express Money Orders – same as a Postal Money Order, yet purchased at the offices of different express companies, some travel agencies, supermarkets, pharmacies, and convenient stores.

Telegraphic Money Orders – you buy a message directing a telegraph office to pay a sum of money to a certain person or business. Normally this is used in emergency situations.

Electronic Funds Transfer Bill Payment – you can instruct

your bank to make bill payments electronically, preventing you from having to send a check or go to the office and make the payments personally

Direct Deposit – salary can be deposited into your account, or several accounts, electronically.