The Lost Art of How to Read a Check
Once one of the most popular forms of payment, checks have now fallen to the wayside as credit cards and digital payments have overtaken them. While checks are sometimes considered old-fashioned, they can be a great way to keep track of your budget and even be safer than cash when you come across a business that doesn’t accept cards.
Since checks aren’t used as frequently as other payment methods, it’s helpful to have a refresher to learn exactly how to read a check and understand what the numbers and different lines mean when you come across one.
Why You Should Learn To Read a Check
In a world of digital transactions, it’s helpful to have checks on hand. Many businesses prefer paper checks to cut down on transaction fees. They are also helpful in paying utilities and other bills to keep a manual record. Finally, checks make a safer gift than cash but still allow the recipient the ability to buy what they want instead of a gift card.
1. Personal Information
In the top left corner of the check, you will find the details about the checking account owner. This includes the account owner’s name, address, and sometimes phone number.
The name section is the owner of the check - the individual whose personal or business account the money will come from.
If your cashier asks you to include a license number on the check, or if you've recently moved and need to include your updated address, you can write those details in the space underneath the printed name and address. As long as your notes don't get in the way of any important information, the check will still be considered valid and can be cashed.
Usually, the date box contains the date the check was written, but it can also contain the post-date, which is the date the payee should cash it. This may be done in cases when there won’t be enough funds in the account to pay the check until a future date, but the writer still needs to submit payment.
Even if a post-date is provided, the check becomes valid the moment it is signed. This means the payee can deposit the check at any point. If the check is cashed without enough money in the account, the check will bounce. In that case, both the person who wrote the check and the one who cashes it may incur fees from the bank. For that reason, it’s best to wait until the postmarked date to cash it.
3. Check Number
The top right corner contains the check number. This serves as an identifier if you receive multiple checks, and it is important to note the number for your records—generally, the lower the check number, the newer the account. The check number is also included at the bottom of the check. This one is primarily used for computer purposes when scanning a check instead of as a record for yourself.
4. Bank Fractional Number
Right below the check number, you will find the bank fractional number. You usually will not need to know this number, and it is only helpful for banks when processing payments.
5. Payee Line
The payee line is identified by the wording “PAY TO THE ORDER OF.”. This is where the check owner will write the name of the person or business who is being paid. They are the ones that are authorized to cash the check.
In order to cash the check as the payee, you will have to endorse the check by signing the back and writing “For Deposit Only to Account Number XXXXXXXXXX.” This is the most secure way to endorse the check and will help avoid having it deposited into someone else’s account.
On occasion, the word “Cash” will be written on this line instead of the recipient’s name. Writing “Cash” allows anyone who has access to the check to deposit the check; it essentially allows the check to act like cash.
It is less secure to write “Cash” instead of the payee name, but people may do it if they don’t know who to make the check out to, such as if you are a new tenant and don’t know the name of your landlord. Once the landlord receives the check, he or she can write in their name to make the check more secure. Another reason to write “Cash” is if you are writing a check to yourself to take out cash. However, it’s usually better and faster to withdraw directly from the ATM instead of waiting for the check to process.
6. Dollar Box
The dollar box is where you will find the amount the check is worth written in numerals. This is the unofficial amount; it is used to confirm the amount that is written out in words on the check line, the main portion of the check.
To make sure no one else can add numbers, start writing the number as close as possible to the left side of the box. Make sure to also include the cents amount, even if it doesn’t have any, like 200.00.
7. The Amount of the Check
The amount of the check is what the check is worth, and this number should always match the number in the dollar box. The number is written out in words with the cents in numerals. For example, $231.43 is written as “Two Hundred Thirty-One and 43/100.” The cents should always be written out of 100 and not just the cent amount by itself.
If there is space leftover on the line once the total amount is written out, strike out the rest of the space. This is to make sure no one else can add to the amount.
8. Bank Name
The bank name indicates where the funds of the check are coming from. There might be a logo here, but it should also include the address and name of the bank. If you have any questions about the check, you can contact the bank for more information.
9. Memo Line
The memo line is the only place on the check that is optional. It is used to keep track of what the check is for, such as “Rent” or “For Mom’s Birthday.” The memo line can also be used for other reference information like an account number.
10. Signature Line
The issuer of the check needs to sign the signature line to make the check valid. If the check is not signed, your bank may not accept it or will charge additional fees to process it. In order to avoid this, contact the issuer if the check isn’t signed.
You might come across a check that has “No Signature Required” in this spot. This means that the payments have been approved online or over the phone. If you don’t recognize the signature or if you have any questions, contact your bank.
11. The Bank’s ABA Routing Number (The Routing Number)
The bottom of the check contains a series of numbers. The first portion of them in the bottom-left corner is the bank’s American Bankers Association(ABA) routing number. A routing number is a nine-digit number assigned to the bank by the ABA. It shows which bank the funds will be pulled from.
If you are using direct deposit, you may need this number, but most often, you will not need to pay attention to this number. You may come across a bank with more than one routing number. In that case, double check which one is the correct routing number before you use it for direct deposit by calling your bank to confirm.
12. The Account Number
The middle number at the bottom of the check is the checking account from which the money will be withdrawn. You won’t need to know this number if you are receiving a check, but if it is your own check, it is handy to have when signing up for different accounts online. Typically, your account number will contain ten digits.
Checks may look confusing at first if you haven’t used them frequently, but with a little practice, it’s easy to learn how to read a check and understand them. By knowing what each section of a check is, you can make sure a check is secure and valid and use them to find your account and routing numbers.
If you are ready to open a checking account, find out which type is right for you by clicking here.
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Information contained in this blog is for educational and informational purposes only. Nothing contained in this blog should be construed as legal or tax advice. An attorney or tax advisor should be consulted for advice on specific issues.