A cheque is a representative money issued to a person on behalf of another person to debit a particular amount of money from his account. Using technology to access banking services, is an easy task and less time consuming unlike earlier where standing in a queue for most of the transactions was mandatory. An increase in NEFT, RTGS, and other online transactions have reduced the old methods of banking. But, even now some of the financial transactions demand issue of a cheque, such as where individuals need to submit post-dated cheque in order to consummate a particular transaction.
Here are few things to know before issuing a cheque:
1) Account Balance: Make sure you have sufficient account balance when the cheque is ready to be presented for payment or else it will become a dishonored cheque. Also, maintain a minimum balance after your cheque is cleared. Or else the bank will deduct some amount if there is no minimum balance maintained in the account.
2) Right name of the payee: Before writing a cheque confirm the name and spelling of the payee to whom you want to issue a cheque. If you have the account number, better to add next to his name such as Ashok Raman A/c 012356. Banks have the right to dishonor a cheque if there is a discrepancy in name spelled or any other.
3) Make use of A/c payee By crossing it twice with two parallel lines on the left-hand top corner and writing account payee will transfer amount to a particular person’s bank account only.
4) Cheque Date: Cheque once issued will be valid for 3 months only. Post dated cheques are when a date on the cheque is for a future date of payment. The post-dated cheque is not payable until the date which is mentioned on the cheque. On that particular date, it is called a cheque. also avoid stale cheque too which means a cheque that was presented after a certain period of a payment date written on it.
5) Credit score: Yes, if the cheque is bounced there can be a negative impact on your credit score. Make sure that your cheque is honored under all circumstances to avoid embarrassment and a bounced cheque.
6) Lost cheques: In case, if you have lost or misplaced a few cheques it is better to inform the same to the bank and give the stop payment of cheque by providing a cheque number and any other relevant information needed to stop the cheque.
7) Higher amount: Cheques above the limit of N1,000,000 will be examined under the ultraviolet lamp and also have to go through multiple security checks to avoid fraudulent activities.
8) Signature: This is also an important part of writing a cheque, ensure your signature is regular and also ensure that you sign twice were needed to avoid been dishonored by the bank.