As we move towards digital payment methods like Google Wallet, PayPal and more, it is important not to forget the classic payment method of a physical check. These little pieces of paper can be confusing – what do all the different numbers and codes mean? What is that line at the bottom of the check for? This article will break down everything you need to know about checks.
Let’s start with some basic information on checks. A check is a written document that contains an order to a bank or other financial institutions to pay funds to the person or organization named on the check. The person or organization receiving the payment must present the check to their bank or financial institution for payment. Checks are typically written on personal checking accounts or business accounts.
Parts of a Check
There are several elements that you need to understand in order to decode a check.
- Payee line: This is where you write the name of the person or organization that will receive the payment.
- Numeric amount box: This is where you write the monetary amount that will be paid out.
- Written amount line: This is where you write out the monetary amount that will be paid out in words.
- Account number: This is the account number for the bank account the check is tied to.
- Routing number: This is the routing number for the bank or financial institution where the account is held.
- Date: This is the date the check was written.
- Check number: This is a sequential number that is used to identify the check.
The Magnetic Ink Character Recognition (MICR) line is the line of numbers printed in magnetic ink at the bottom of the check. This line contains the routing number, account number, and check number. This line is read by machines to help sort checks and make quicker processing possible.
Types of Checks
There are various types of checks, each serving a specific purpose. Below are some of the most common types of checks:
Personal checks are checks issued by individuals to make personal payments. These types of checks usually have the individual’s name as the account holder.
A cashier’s check is a check issued by a bank. The funds for the check are drawn from the bank rather than from an individual account. These checks are often used when a large sum of money is required and when personal checks may not be accepted.
Certified checks are checks that have been verified by the issuing bank for available funds and signature authenticity. These checks are often used for large purchases, such as cars or houses.
A money order is a payment order similar to a check that is issued by a financial institution. The difference is that the money order needs to be prepaid before it can be issued. These types of payment orders are commonly used for purchases where personal checks or cash are not accepted.
Due to fraud and identity theft, checks are equipped with several security features to help prevent counterfeiting. Below are some common features:
Watermarks are images or patterns embedded in the paper of the check. They are only visible when held up to light, which makes them difficult to reproduce.
Void When Printed
The phrase “void when printed” appears on many checks. If someone were to merely photocopy a check, the copy would show the words ‘void’ several times because the phrase is in small print and is barely visible.
Many checks will have a security border, a thin line that circles the check. It can often have decorative patterns within the line.
A check register, or a checkbook ledger, is a document that is used to keep track of a person’s or a business’s check transactions. The check register can either be a paper booklet, or it can be kept on a computer or mobile device. The check register contains the following information:
- Check number
- Date of transaction
- Payee name
- Transaction amount
- Withdrawal or deposit method
- Balance of the account
Checks, despite their age, are still a reliable and important payment instrument. It’s important to understand the different parts of a check, security features, and the different types of checks before they are used.. With a little bit of knowledge, checks are easy to navigate to complete quick and seamless financial transactions.
- What is a check?
- A check is a written document that contains an order to a bank or other financial institutions to pay funds to the person or organization named on the check.
- What are the different parts of a check?
- The different parts of a check are the payee line, numeric amount box, written amount line, account number, routing number, date, and check number.
- What is a cashier’s check?
- A cashier’s check is a check issued by a bank. The funds for the check are drawn from the bank rather than from an individual account.
- What is a certified check?
- A certified check is a check that has been verified by the issuing bank for available funds and signature authenticity.
- What is a money order?
- A money order is a payment order similar to a check that is issued by a financial institution. The difference is that the money order needs to be prepaid before it can be issued.
- “What Is a Check?” The Balance Small Business, The Balance, 18 May 2020, https://www.thebalancesmb.com/what-is-a-check-392935.
- “Parts of a Check and How to Write a Check | GOBankingRates.” GOBankingRates, www.gobankingrates.com/banking/checking-account/guide-to-checks-checking-account/checks-parts-checks-checks-filled/.
- “Check Register Definition.” Investopedia, Investopedia, 9 Dec. 2019, https://www.investopedia.com/terms/c/check-register.asp.