CHAPTER 27 USING CHECKS AND OTHER PAYMENT METHODS

CHAPTER 27 USING CHECKS AND OTHER PAYMENT METHODS

CHECK WRITING PROCEDURES • DRAWER--Owner of the checking acct • PAYEE--Person to whom check is written • DRAWEE--The bank or financial institution that pays the check

CHECK WRITING PROCEDURES 1. 2. 3. 4. 5. 6. 7. Write checks in order by number Write the current date on proper space Write payee’s name in “pay to the order of” Write the amount of check in figures Write the amount in words Write the purpose SIGN THE CHECK!!

TIPS FOR GOOD CHECK WRITING • Write checks only on forms provided (or a brown paper bag) • Write checks in ink • Only write checks if you have money in the account to cover them (overdraw) • Use current date (avoid postdating) • Avoid making checks to cash • Always fill in the amount • Void checks in which you make errors • Record every payment, even ATM or EFT!!!

STOPPING PAYMENT ON A CHECK Stop Payment Order--a written notice from the drawer telling the bank not to pay a certain check Usually charged a substantial fee; make sure you have a good reason

OTHER TYPES OF CHECKS Certified Checks--personal check for which a bank has guaranteed payment Cashier’s Check--check that a bank draws on its own in-house funds; service fee Traveler’s Checks--used in travel; requires two signatures (presence of selling agent and when you use them)

SOURCES OF MONEY ORDERS Bank Money Orders--form sold by a bank stating that money is to be paid to the person named on the form Postal Money Orders--receipt copy used to make claims if lost or stolen Express Money Orders--sold by companies like American Express Telegraphic Money Orders--buy a message directing a telegraph office to pay money to a certain person

ELECTRONIC FUNDS TRANSFER • ATM transfers • Online requests • Automatic monthly payments on utility bills • Direct deposit