A cheque is a financial document that directs a bank to transfer money from
one account to another. There are three parties involved in the processing of
a cheque: the drawer, who issues the cheque and holds the bank account; the
drawee, which is the financial institution; and the payee, who is the person
whose name appears on the cheque and will receive the [Link] following
are the various types of cheque;
Order Cheque, Order cheques are only payable to the designated
payee and cannot be cashed by anyone [Link] word “bearer” is not
included on order [Link] will verify the identity of the person
presenting the order cheque before allowing them to cash it.
Bearer cheques, A bearer cheque can be cashed by either the
designated payee or the person presenting it to the bank. The identity of
the person cashing a bearer cheque does not need to be verified. Bearer
cheques are negotiable instruments that can be transferred from one
person to another by mail or other means of delivery.
Open cheques, An uncrossed or open cheque is a type of cheque
that is payable to the person presenting it to the drawee (the bank or
other financial institution on which the cheque is drawn). The drawee of
an open cheque can transfer the cheque to another person by writing
their name on the cheque, making them the next [Link] word
“open” should not be crossed out on open cheques, and the drawer must
sign both the front and back of the cheque. If these requirements are
not met, the bank may refuse to pay the cheque. When the payee of an
open cheque receives the funds, they are required to sign the back of the
cheque.
Crossed cheque, A crossed cheque is a type of cheque that has two
parallel lines drawn across the top left corner. These lines prevent
anyone other than the intended recipient from cashing the cheque. A
crossed cheque reduces the risk of unauthorized parties obtaining the
funds because it can only be cashed through the designated payee’s
bank.
Post dated cheque, A post-dated cheque is a type of cheque that
bears a future date, rather than the current date. The funds written on
the cheque will not be transferred to the payee until the specified date
has passed. The cheque remains valid for a period of three months from
the date it was written by the drawer.
Blank cheque, A blank cheque is a type of cheque that has only
been signed by the drawer and has the remaining columns left blank.
The drawee can fill in the amount on the cheque. The use of a blank
cheque often reflects a high level of trust between the parties involved.
Gift cheques, A gift cheque is a type of cheque that is used to give a
specific amount of money to the recipient, rather than giving cash
directly. Gift cheques are often issued in a decorative format. There is
no limit on the number of gift cheques that can be purchased.
Bankers cheque, Bankers’ cheques are issued by a bank on behalf
of a customer. The bank is instructed to pay a specific sum of money to
the payee within the same city. Bankers’ cheques are printed in advance
and are not negotiable. These cheques remain valid for three months
from the date of issue, but can sometimes be revalidated under certain
legal circumstances.
Stale cheques, Stale cheques are cheques that have a written date
that has passed the period of validity and can no longer be cashed. The
funds written on a cheque must typically be cashed within three months
of the date it was written.
Traveller’s cheque, Traveller’s cheques are a type of cheque that
is issued by a bank for the purpose of transferring money from one
location to another. These cheques are accepted at a wide variety of
locations.
Self cheques, Self cheques are cheques that are issued by the
drawer themselves. These cheques are used when the drawer wishes to
withdraw funds from their own bank account. It is important to handle
self cheques carefully, as they can be cashed by anyone who possesses
them if they are lost or misplaced. This can potentially lead to
unauthorized access to the drawer’s bank account.
Mutilated cheques, A cheque that is torn or damaged is called a
mutilated cheque. Banks generally will not process a payment from a
mutilated cheque without the confirmation of the drawer. If a cheque is
not severely damaged and no crucial information is lost, the bank may
still be able to process the payment.
Generally, Even though many people might not now use their cheque books very
often, with money changing hands electronically in commercial environments, for
the most part, the paper cheque does still play a part in money transactions in
both business and for private individuals.
Reference
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[Link]://[Link]/news/16690-five-reasons-you-may-still-need-cheques-and-
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