Banking: Check-Writing 101
By Amy Fontinelle
The ability to write checks from your checking account allows you to pay bills or send money to relatives more securely than using cash and less expensively than using a cashier's check or wire transfer service. In this section, we'll teach you how to do it.
The Anatomy of a Check
First, you should understand the different parts of a check. Along the check's bottom edge will be a long series of numbers. The first series, on the left, is the routing number. This is a nine-digit number that identifies your bank and is used by financial institutions to process checks. Routing numbers, more formally called routing transit numbers, are sometimes also called
Next to the routing number will be your account number. With the routing number and your account number, the bank that ultimately processes the check you write will know what bank to get the money from (using the routing number) and specifically, what account within that bank the money should come from (using your account number).
To the right of your account number will be the check number. This same number also appears at the top of your check in the right corner. The check number is basically just a recordkeeping device that helps you and your bank keep track of the checks you've written. If you ever need to locate information about a check after you've written it, instead of searching for a dollar amount, a date, and a payee, you can simply use the check number. Check numbers will never repeat within the same account.
Finally, the reason the routing number, account number and check number at the bottom of your check are in that funny-looking type is so they can be easily read by machines that process checks.
How to Write a Check
Writing a check is simple once you know what you're doing, but it can be confusing when you haven't done before. What goes in all those blank spots?
|Figure 1: Blank check|
|Figure 2: Completed check|
On the top right side, there's a short line where you'll fill in the date. In the past, people used to post-date their checks so that they couldn't be cashed right away. For example, if someone needed to send a check to pay the water bill on the March 13 but knew they weren't getting paid until March 15, they might write March 16 on the check even though the actual date was March 13. Today, that strategy is useless because of Check 21 (we'll discuss this more in a minute), so you might as well put today's date on the check.
In the middle of the check are two long lines. The first one says in small print to the left the line, "Pay to the order of". Here you simply write the name of the person65.7065 or company you want to give money to. It's important to use the person or business's formal name so that the check will be accepted (so don't write any checks to "mom"). You can even write checks to yourself. (You would do this if you wanted to transfer money from your checking account to another account that you own.) If you're not sure what name to write on the line, ask the business, "Who should I make this check out to?"
In the box to the right of this line, you write, in numbers, the amount that the check is for. Easy, right? Then comes the part that might be the most confusing for beginners. This is the line underneath "Pay to the order of" where you write out, in words, the dollar amount of the check. Let's use a check for $65.70 as an example. You could write "Sixty-five and 70/100" or "Sixty-five dollars and 70 cents" or "Sixty-five dollars and 70/100." It doesn't really matter which of these methods you use - as long as the dollar amount you write in the box is the same as the dollar amount you write out on the line, the check will go through.
At the bottom left of the check is a blank line that says "memo" next to it. Filling out this line is optional. Most people use it for one of two things: 1) when paying a bill, they write their account number on this line, or 2) they write what the check is for on this line so when they look at the canceled check or carbon copy later, they'll remember what the check was for.
Last, make sure to sign the check. Without a signature, your check will not be accepted. The signature line is the bottom right line on the check.
Check 21: Clearing for the 21st Century Act
The Clearing for the 21st Century Act (Check 21) is a federal law that was enacted in 2004. It allows checks to be processed without physically transporting a paper check from one place to another. Instead, an electronic image of the check can be used. This technology makes it less expensive for banks and other companies to process checks and also means that checks get cashed faster. The delay that used to exist between the time you wrote your check and the time it was actually cashed was called a "float." Today, the only lag time between when you write a check and when it gets deposited is the amount of time it takes any check you mail to get through the postal system and be dealt with by the recipient.
The best way to avoid any problems with float time is to not write a check unless you actually have the money in your account. Often, any fee you would incur for paying a bill late will be lower than the overdraft fees you'll incur if you write a check for more than what's in your account. It's also important to note that if you write several checks on or around the same date, your bank will generally remove the money from your account in the way that is most likely to benefit the bank. This means that the biggest checks will be cashed first, and if you don't have enough money in your account, you'll incur an insufficient funds fee or overdraft fee for every bounced check. (To learn more about how this happens and how to avoid it, read When Good People Write Bad Checks.)
To use your checking account on an ongoing basis, you'll have to put money in to replace the money you take out. We'll teach you how in the following section.
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