Step-by-step guide to cheque deposit: How to make sure it doesn't get bounced
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Cheque payers and payees, check out our cheque-list on how to cash in and not be on the receiving end of a bounced cheque.
Whether you’re the payer (the person issuing the cheque) or the payee (recipient of the amount specified on the cheque), there’s a number of steps you need to take to ensure your cheque clears without a hitch. If this is your first rodeo with cheques, be forewarned: this mode of payment is a bit more finicky than your average bank transfer.
This might be an outlier today now that digital transactions are as second nature to us as the air we breathe. But cheques are still a prevalent form of payment — particularly for big purchases.
They come in the form of a physical document that orders a bank to make payment for a certain amount of money from one’s bank account to the account of the person you’re issuing the cheque to.
For those of us who are under 25, chances are you’ve never written a cheque — much less own a cheque book. But don’t write them off just yet. Today, cheques are still used as a form of payment for big purchases, such as placing that 1per cent deposit for a condo.
In some companies, issuing cheque payslips are also the norm. In fact, your annual bonus may come in a cheque form as well. However, as cheque usage continues to fall and digital payments become more widely adopted, it’s only a manner of time till we see cheques phase out in the coming years.
A cheque could bounce for a number of different reasons, and that’s mostly because we have the freedom to write any amount on them. Unlike digital banking, there’s no pop-up notification to let you know that the amount you wish to transfer to a recipient is larger than your account balance. Instead, you could only find out that the cheque bounced several days later.
Overdrawing from one’s account is not without its consequences. The payer’s bank could charge fees, otherwise known as overdraft interest charges, as well as other administrative fees.
Common reasons why your cheque could bounce:
There are very specific instructions on how to write a cheque.
When issuing the cheque to the payee, ensure that the name is spelled correctly and in full. Preferably, it should be written in dark blue or black ink as it makes it easier to read. Most importantly, the name on the cheque needs to match up with your payee’s bank records.
Below your payee’s name, there’s where the amount is spelled out in full. As such, do ensure that the amount that’s spelled out and the amount written in figures are the same. If there’s a decimal point or a comma (especially with larger figures), it needs to be written clearly so as not to be mistaken for one another.
Take for example the differences between $101,833 and $101.83.
Also, be sure to end off the written amount with ‘only’.
If there’s any extra space after the amount, it should be crossed with a single line. This applies to both the amount that’s written out as well as the one in figures.
There are certain rules for issuing cash cheques as well as for their opposite counterparts — the cheques that are not meant to be encashed (A.K.A. the payee is not allowed to exchange the cheque for cash).
We’ve compiled a to-do list for the two different types of cheques below.
Cash cheque | Cheques not meant to be encashed |
Write out ‘Cash’ on the pay line Don’t cross the cheque on the top left corner Don’t cross out ‘or Bearer’ | Do cross out the cheque by drawing two parallel lines on the top left corner of the cheque Cross out ‘or Bearer’ |
Keep in mind that your signature needs to tally with the one in your bank records or it may risk getting bounced or flagged by the bank.
Flip over the cheque and write out your account number (with the dashes in case you were wondering), your full name (that tallies with your bank records) as well as your contact number.
If the date happens to be post-dated, you could only deposit the cheque on the written date itself or after the date.
One thing about cheques is you need to work for it in order for it to work for you. In other words, there’s some legwork involved in finding your bank’s nearest quick cheque deposit box where you can drop it off. There’s even specific cut-off times to keep in mind if you’re in urgent need of funds, but we’ll touch more on that in the next step.
When your deposited cheque amount could kick in ultimately depends on when you’ve dropped off the cheque and the bank’s cut-off time for clearing cheques. For some, should you drop off your cheque at the deposit box on a Thursday right before the cut-off time, you could see the amount reflected in your bank account on the following day, albeit only after 2pm.
However, missing the cut-off time on Thursday could delay the availability of the funds all the way to next Monday (after 2pm).
As such, it is incredibly important to know your bank’s cut-off times in order to avoid delaying payment.
For example, here are the cut-off times for DBS bank:
This article was first published in SingSaver.com.sg.