Checks are believed to have originally started in Persia as a way of negotiating payment.
They instruct your financial institution to withdraw a certain amount of money from your account in payment of the depositor (the person you wrote the check to).
A “blank check” is literally a check that has been signed, but the amount has been left blank, leaving the payee capable of writing in any amount.
Some banks give checks for free; others, you must buy.
Checks are only valid for a certain amount of time after they’ve been written – often 6 months to a year.
A valid check usually includes several things: a place of issue, the check number (starts at 1, unless you request otherwise, and simply moves upward numerically), your checking account number (assigned by your bank), the date of issue, the payee (the person or organization you are writing the check to), the amount of instructed payment, and your signature. They may also contain such information as addresses, a routing number, and more.
There are several types of checks: an order check (payable to the named payee), a bearer check (payable to whoever has it), a counter check (also called a temporary check), a payroll check (specific name for the check used to pay wages), a traveler’s check (often used instead of cash on vacation), and a money order (an official check from a bank or post office).
The use of checks has been declining for years because of the ease and small expense of credit and debit cards. Many businesses will not accept checks.
If you write a check for more than you have in your checking account, it will be rejected for insufficient funds when your payee tries to deposit it. This is called a “bounced check.”
It is possible to stop payment of a check that you have already issued if the funds have not yet cleared. This is often an option if the check is lost or stolen or if you need to stop a financial transaction.
Since checks can include a lot of personal information (your name, account number, address, signature, etc.), they can be used for fraud and/or identity theft. It is very important to report any lost or stolen checks before this happens!
E-checks are very popular. They represent an electronic funds transfer that is made possible through the information on a check – the account number, routing number, etc.