January 2020 – Way of the Rich

Handling large amounts of cash can be dangerous, especially when you’re out in public. A $10 bill would be a bummer to lose, but $10,000 isn’t an easy amount to retrieve. To make these types of transactions safer, people have been making use of checks. A check is comparable to a contract wherein the only entities who are legally allowed to get involved in the process are the ones indicated on the check. Therefore, it makes sure that your money gets deposited in the right person’s account. It’s a great way to ensure the money is handled securely. What Is a Check? Simply put, a check is used to instruct a bank to send money from your bank account to the holder of the check. A check involves three different parties to complete the transaction: Payor – the person or entity who writes the checkPayee – the person or entity who the check is written toDrawee – the bank on which the check is drawn from Although transferring money directly from one account to another doesn’t seem that hard of a task, checks make it easier to move larger sums of money in a secure manner. Checks also serve as a contract between the three parties mentioned. No one else is allowed to get involved in the transaction other than the three parties, lessening the risk of losing the money written on the check. For example, if you were to purchase a new car and had to withdraw $20,000 from the bank before bringing it over to the car dealership, it would cause difficulty and discomfort since it’s a large amount of cash. If you wrote a check for the $20,000, there would be no need to worry about losing the money on your way to the car dealership since you aren’t holding onto the amount in cash. The bank would also not hand over the money to someone other than the name or company written on the check. Where Do You Get Checks? When you open a checking account at a financial institution, they usually provide you with checks. Getting checks directly from the bank ensures validity. While checks are usually offered for free, some banks will charge you $20 or more for every box unless you’re account is premium. Although getting checks directly from your bank is convenient enough, there are other options available where you can order personal checks, such as third-party printers. They can either be online check printers or big-box stores. Buying from third party printers saves you half or more of the cost you’d pay a bank, which is typically around $10 to $15. It’s a much cheaper option, especially if you intend to use a lot of checks. At times, they may also offer discounts if you have coupons or buy in bulk. Authenticity isn’t a problem as long as you’re engaging with a third-party provider that’s accepted by the Checking Payment Systems Association. How to Fill Out a Check Writing a check is simple, but it’s important to know how to fill it out the proper way to avoid wasting the check due to mistakes. Date On the upper right-hand corner of the check, you’ll find a line with “date” printed under it. This is where you write down the current date of when you’re writing the check. Although you can postdate the check, writing the exact date the check was written makes it easier for you and the recipient to keep your records accurate. Payee The next line would have “Pay to the order of” printed next to it, which is where you write down the name of the person or organization who will be receiving the check. It’s important to make this accurate because it affects who has the ability to deposit the check. If you’re not sure who to address it to, it’s best to ask the person or organization you’re paying. Amount in Numeric Form Next to the payee’s name, you’ll find a box with the “$,” indicating this is where you write the amount in the form of numbers. Make sure that you right as far left as possible to prevent fraud. For example: if the amount is $120.10, you should start writing immediately after the left-hand border of the box. Write it like this: not like this: Amount in Words Below the payee and dollar box, you have to write the amount in words to avoid fraud and confusion. Write in capital letters to make it harder to alter. The amount written here will be your official payment. This means if the amount written here is different from the amount in numbers, the amount in words is the legal amount of the check. Memo There is a memo or “for” line, which is completely optional. This does not affect how the bank will process your payment, but it is a good way to indicate the reason for writing the check. You can also include information that the payee can use to process the payment such as your Social Security Number when paying the IRS or an account number for your utility payments. Signature The last line at the bottom right-hand corner is where you sign the check. You need to use the same name and signature filed at your bank. This is one of the most important steps because a check without a signature from the payor is considered invalid. How to Write a Check with Cents There are two ways to note how to write cents on a check: in numeric formWrite the amount of dollars in numbersAdd a decimal point followed by the amount of cents in numbers For example: The amount you’ll be putting is one hundred dollars and ten cents. Write down 100 (dollars) followed by adding .10 (cents) in the dollar box provided. The final result will look like this: 100.10. in wordsWrite the dollar amount in wordsFollow this by the word “and”Write the number of cents in fraction form To write the cents as a fraction, you simply have to write the amount of cents and add “/100” next to it. This is simply the fractional amount of a whole dollar. Therefore, $100.10 in words would be “one hundred dollars and 10/100.” How to Write a Check for $1,000 Writing a check for $1,000 is done by following the process of filling out a check. Write the current date when you are writing the check.Write the payee’s name, whether it is a person, entity, or multiple people.Write 1,000 on the dollar box provided. Make sure you start writing at the far left of the dollar box, not in the center.Write the amount in words. Since there are no cents, you can write “one thousand and 00/100.”If you need to add information, such as what the payment is for or details to help the payee find your account, write them on the memo or “for” line.Sign the check on the bottom right line, and you’re done. Who Signs the Back of a Check? Before a check gets deposited or cashed, it should first be endorsed. Endorsement is the act of signing the back of a check with the payee’s name—the person who will be receiving the check. If you’re required to add details to process the check, they are written along with the signature. Although the signature is the most important, these details control how the payment will be handled and protect you from fraud. It is safest to endorse the check only when you get to the bank unless you’ll be depositing multiple checks in one transaction. The payee name written on the front of the check must match the name signed on the back. If your name was misspelled, you can sign it with the incorrect spelling and sign it again with the proper correction. There is usually a line that is marked for endorsing the check and includes instructions that say, “Do not write, stamp, or sign below this line.” So, make sure to keep the signature within the provided space. Blank Endorsement A blank endorsement is simply signing your name on the back of the check. Although this is the least secure way of endorsing a check, it is also the most common. If a check is payable to more than one person, whoever endorses the check should be the name written on the payee line. Everybody listed will need to sign the check if there is the word “and” between the names. Third-Party Endorsement You can choose to hand over a check written for you to a third-person. To do this, sign the check with “pay to the order of” followed by the person’s name. However, some banks and most cash-checking institutions deny third-party checks due to the risk of fraud. So before doing this, make sure the payee’s bank honors this kind of check. Business Endorsement However, if the check is payable to a business, you will need to sign the check on behalf of the business, and you will need to be authorized to handle the company’s funds beforehand. FBO Endorsement A check can also be made payable to an entity for the benefit of (FBO) another. In this case, the first payee should be the one to endorse the check. This is usually done when another party will be receiving the check on behalf of the primary payee. How to Fill Out a Check Deposit Slip at a Bank The deposit slip serves as a written order addressed to the bank instructing them to transfer funds into your account. This is used to put money in an account such as cash, checks, and money orders. To fill out a deposit slip, you have to complete the following steps: Provide the needed personal information as seen on the slip. This is usually the current date, your name, and your account number. If you’re using a pre-printed deposit slip from your checkbook, you’ll already have your information printed on the slip. List the amount of money you want to have deposited. The first column is for the bills, and the second column is for coins. There are two types of money that you can have deposited. CashChecks These will be listed separately on their respective lines. If you’re depositing multiple checks, you need to write each check number and amount individually. Add up the total amount that will be deposited on the subtotal line. This refers to the total of both cash and checks listed. If you’d like to withdraw some of the money, write them on the “less cash” line. This is completely optional, and you can choose not to take out any money. If you will be making a withdrawal, the amount gets subtracted from the total to be deposited. Calculate the total amount to deposit. Subtract the withdrawal amount from the subtotal if necessary and write that amount next to the “total” box. The subtotal is the final total if you’re not going to withdraw any of the money, and you will need to write that amount again next to the “total” box. Sign the deposit slip. This is required if you will be getting cash from your deposit. Take the slip and the money that will be deposited to the bank teller.