A cheque is a document that orders a bank to pay money from an account. Technically, a cheque is a negotiable instrument instructing a financial institution to pay a specific amount of a specific currency from a specified transactional account held in the drawer’s name with that institution. Both the drawer and payee may be natural persons or legal entities.

How can you use a cheque?

• Paying money: you can pay anyone with a cheque, so long as they choose to accept it. Some businesses have decided not to accept cheques because there’s a bit of risk involved if the cheque bounces. The Cheque Card Guarantee Scheme – which used to offer retailers protection – was withdrawn in June 2011.

• Accepting money: if someone wants to pay you with a cheque, think carefully before you accept it. You should only accept cheques from people you trust, because if it turns out that the cheque is a fake, or the person doesn’t have enough money to pay it, it might be difficult to get hold of the money.

Cheque writing basics

Writing cheques is simple and safe, as long as you:

• Write the name of the person or organisation you’re paying.

• Draw a line through any blank spaces on the cheque so people can’t add extra numbers or names, and

• Add details (such as a reference or account number) to the payee line after you’ve written the name of the company if the cheque is written to an organisation, bank or building society. This makes sure the money ends up in the right place.

When does the money leave your account?

• When you write a cheque, the money won’t leave your account until the person you give it to pays it into their bank or building society account. Cheques do not have an expiration date but it is common practice to reject a cheque presented for payment bearing a date more than 6 months earlier. This is at the bank or building society’s discretion.

• Make sure you have enough money in your account to cover the value of the cheque until the person has paid it in and the money has been deducted.

• The money usually leaves your account three working days after the person pays in your cheque.

• If you pay a cheque into your account, you’ll be able to use the money four working days later – but you won’t be sure the cheque has cleared (the money is really yours) until six working days after you’ve paid it in. If you use the money in the meantime, you may have to pay it back.