What is Cheque ? Types | Importance | Components of Cheque ?

Get your all doubts solved regarding the cheque 

You must have heard about the term “Cheque”. It’s a very common term today. It is also one of the best ways when you have to do a transaction of larger amounts. A cheque is defined as a type of document which gives an order to a certain bank to give the amount written on the cheque to the person. A person who has a bank account in that bank is known as the drawer. He or she writes the cheque. The person on whose name that cheque is issued is known as payee. A cheque has all information regarding the transaction which will proceed once the drawee submits that cheque to the bank.

Cheques are known to us since ancient times but during the 20th century,  their use increased. The main reason behind it was the introduction of no cash payment methods. Although,  today we have ATM swiping machines, and many online methods of payment, but cheques are still irreplaceable. You might think why a cheque is irreplaceable. Well, even today people use cheques when they want to do transactions of larger amounts. Today we will know and everything about the cheque.

What are the Types of Cheques?

There are various types of cheques listed below:

1.    Bearer’s cheque:  It is a type of cheque where the payment is made to a person who bears the check. You just need to carry this cheque to the bank and you may get the amount mentioned in the cheque. Since this cheque is for the bearer, the bank doesn’t require any other permission. 

2.    Order cheque: In this check, the name of the person to whom the payment is done is written. When this cheque goes to the bank, the bank does some investigation to know about the bearer of that cheque. If everything is fine, you may get the money mentioned on the cheque. 

3.    Post cheque:  In this cheque,  the date for withdrawal of money is later than the date on which the cheque is written. Even if you go to the bank with that cheque,  you will not get any money. The transaction will be processed only on the date mentioned on the cheque.  You may get the money if you go to the bank after the date mentioned on the cheque. But, you cannot get the money before the mentioned date.

4.    Traveller’s cheque: As you can easily understand,  these cheques are for people travelling from one country to another. It is not always possible to carry large amounts of cash while travelling. Therefore,  the foreigners carry this cheque. The cheque is given to the foreigner by a bank in their country and they may use it to get currency from a bank located in any other country. The best thing is that these cheques never expire. So, no need to worry when you travel from one country to another. You can carry money in form of a traveller’s cheque. 

5.    Self cheque: These cheques are written for self. In these cheques, you will see that self is written in the drawee’s column. But, you can’t get money from any other bank if you carry this cheque. You need to carry this cheque to the bank where the bearer has a bank account. You will get the cash in that bank.

There are some other types of cheques like crossed cheques, stale cheques,  banker’s cheques etc. Each cheque is different from another at some point. Further in this blog, you will know more about the cheque.

Crossing Cheque : Types and Importance of Crossing Cheque

What are the Components of a Cheque ?

A cheque is a rectangular piece of paper having some important information regarding the transaction on it. Although a cheque has various things written on it, four of them are most important. 

•    Drawer – This is the person from whose bank account, the money will be given to someone. The name of this person is printed on that cheque and there is a column for the signature of this person. For any transaction to take place, there should be a sign on the drawer in the signature column.

•    Payee- It is the person to whom the drawer wants to give money. The name of the payee has to be written on the cheque. The payee can get the money from the bank once the drawer signs the cheque.

•    Drawee – It is the bank in which the drawer has an account. Using the cheque, the drawers order the bank to give money from his/her account to the payee. The name of this bank is printed on the cheque. When the payee will give the cheque to the bank, they might do some investigation for the drawer’s opinion. After it, the payee can get the money.

•    Amount – It is the money that you want to give to the payee. There is a column present in the cheque for writing the amount. The amount is written in numbers. This amount will be given to the payee from your bank account.

Apart from these four parts, you will see a column for the date and signature.  There is some machine-readable routing and account information present on the cheque. Before the 20th century, there was no column for the signature of the drawer. But since the use of cheques increased during the 19th -20th century, some new changes were made in the cheque to increase security. Therefore,  the column for the drawer’s signature was included in the cheque.

How to Write a Cheque ?

Are you one of those people who get confused when it comes to writing a cheque? Well, don’t worry.  It is not too tough. Certain things should be kept in mind while writing a cheque. In this blog, we will solve your problem.

Here,  we have explained the steps for writing a cheque :

Step 1: Open your chequebook and find a blank cheque. Go to the date column of the cheque. Here,  you have to write the date on which you are writing the cheque. Don’t do any mistakes while writing the date, write it clearly in the column. 

Step 2: Next, you should write the name of the payee. A payee is a person to whom you want to give money. There is a column available in the cheque for the name of the payee. In that column,  write the name of the payee. Write the name of the payee correctly, don’t do any mistakes while writing the name. 

Step 3:  Now, you have to write the amount that you want to give to the payee. In the cheque, there is a column for writing the amount both in numbers and words. First, write the amount in numbers. Then, write the amount in words. Don’t mistake while writing the amount. Even, a single zero can change the amount that you want to give to the payee.

Step 4: The most important step. Here, you have to sign the cheque. Before signing, you should check the other things like date, name of the payee, amount etc. If these things are written correctly and you still want to give money to the payee, sign the cheque. There is a column present in the cheque for the drawer’s signature.  You have to sign in to that column.

It’s not very tough to write a cheque but you need to be conscious while writing the cheque. You should do any overwriting or mistakes while writing the cheque.

What is the Importance of a Cheque ?

A cheque has many benefits. It’s important in many ways. Some of these benefits are listed below.

•    No need to carry large amounts of cash – When we carry large amounts of money with us, there are many fears. We might forget our cash at any place or a thief may steal it. But, it is easy to keep a cheque securely in your bag and use it when required.

•    Traveller’s cheque- When we go to travel from one country to another we need to carry money to fulfil our needs. But it’s not safe to carry a large amount in form of cash. Traveller’s cheque is one of tee best things in this case. You can keep a traveller’s cheque which can be used as currency in any other country. You just need to give the traveller’s cheque to a bank in the country you went to travel to.

•    Safe method of payment – It is one of the safest methods of payment. The cheque itself is like evidence for the payment made and therefore you don’t need to give any extra receipts for the payments made. Also, all the payments done using cheques are recorded by the bank. Therefore,  you don’t need to maintain a separate record of the payments made. Earlier when the use of cheques wasn’t much popular, people have to maintain separate records for the payments made.

Apart from the benefits mentioned above, there are many benefits of using a cheque. The best thing is that you don’t need to carry large amounts of many always.

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