Writing checks is a more secure alternative to paying in cash. Although checks are almost as good as cash, there are some things you should know before signing away. Here's your checkbook cheat sheet to ensure that your transactions run smoothly, and your money stays safe.
1. Write your checks carefully.
Once you have a checking account, you can order a checkbook from your bank.
Here’s how to write a check like a pro:
This section needs to be filled. Make sure you write the complete date—month, day, and year. If you write a future date, known as a “postdated check,” it can only be used on or after the date on the check. The date of the check also marks the start of the six-month period during which the recipient can deposit or encash the check before the check expires or becomes a “stale check.”
“Pay to the order of”
The payee line is to indicate the recipient of the check; he or she is the only one who can encash, deposit, or endorse the check. Fill in the blank with the name of the payee who can either be a person or an organization. You can also write “Cash” as the name of the payee; however, this reduces the security feature of the check since anyone who gains possession of the check can use it. For security purposes, if you write or receive a check paid to cash, draw two diagonal parallel lines on the upper left corner to mark the check for deposit only, known as a “crossed check.”
“Peso amount in figures”
Write down in numbers the amount you will pay. Make sure you write as close as possible to the printed Peso sign to prevent unauthorized insertion or alterations. You can also write small dashes before and after the amount for your security.
“Peso amount in words”
Write down in words the amount you will pay. It is important that the amount in words and figures match. You may write the word “only” after the amount in words or write small dashes before and after the amount to prevent unauthorized alterations.
This is where you sign using the same signature you used when you opened your checking account. Before you sign, check that everything has been filled out; never sign a blank or incomplete check.
What goes on the back of the check?
The back of the check has a small section called the “endorsement area.” Use this section when you receive a check, which you can encash or deposit. For encashment, go to your bank, and bring a valid government ID. Once you’re in front of the teller, sign and write your name as shown on the payee line of the check. Sometimes, the bank will ask you to sign a second time after you receive the cash. For deposit, just write your bank account number on the endorsement area and prepare a deposit slip.
2. Take your time, and make sure your checks are perfect.
With the implementation of the Check Image Clearing System (CICS) this year, checks will now be electronically processed by being scanned as images. That means there will be stricter rules when it comes to writing your checks in exchange for a faster clearing cycle (from three to five days to the next business day!). Write legibly in dark, colored ink such as black or blue to ensure readability once your check’s picture is taken. Unlike before, erasures or alterations are no longer allowed even if the check’s been countersigned. If you make a mistake on a check, void it properly to render it unusable. Incomplete information is not allowed either.
3. Make it a habit to balance your checkbook every time you use it.
Your checkbook comes with a Check Transaction Register where you can record all your transactions to keep track of all your issued checks and your account balance. You can also use an Excel spreadsheet. Fill out details such as date, check number, amount, and description every time you write a check, withdraw from, or deposit to your account. Record void checks as well to make sure all checks are accounted for. Use the check numbers as your tracking device! Balancing your checkbook regularly will keep you from writing a check in excess of your account balance. Remember, we have laws against writing bouncing checks such as Batas Pambansa Blg. 22 (B.P. 22) and Estafa under Article 315 of the Revised Penal Code. Better safe than sorry!
4. Double check: reconcile your checkbook with the monthly bank statement.
Balancing your checkbook protects you from possible bank errors as well. By comparing your records with the bank statement, you should arrive at the same account balance. If there’s a discrepancy between your balance and the bank’s, verify whether you had any transactions that occurred near the statement cut-off date. There’s a possibility that those transactions—like deposits in transit or outstanding checks—haven’t been processed yet. If you can’t find the culprit, call the bank.
5. Only accept checks as payment from a trusted person or company.
Checks are only as good as cash when the maker has the ability and willingness to pay. When you receive a check, there is no guarantee that the payer’s account has enough funds. You’ll only find out later when the bank processes the check and by then, it might be too late. Save yourself the trouble and ask for cash whenever possible. If you have your doubts, ask for a certified check or manager’s check which ARE as good as cash.
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