Cheques in Canada
When you land in Canada as a new immigrant you need to be able to handle bank cheques. This post helps you understand how to draw cheques (write a cheque) and how to cash cheques (turn cheques into money).
“Cheque” is more often spelled with “que” in Canada rather than “Check”. The latter means “to verifying” among many other meanings [link]. When you open a bank account that comes with a cheque book then you are opening a chequing account. This is usually the most accessible type of account. The one that you use for your daily transactions, grocery purchase, receiving your salary, and so on.
A Typical Cheque
The following image shows a typical personal cheque in Canada. The image is a sample only and is based on an RBC (Royal Bank of Canada) personal cheque.
Different parts of the cheque from left to right and top to bottom are as follows.
Name: The name of the account holder (the person who draws the cheque).
Address: The street address of the account holder. It usually consists of the street (house) number, the street name, and the suite or apartment number if applicable.
The preceding information is usually printed on the cheque. You do not need to write it manually. Many banks allow you to add your email address and/or telephone number if you are willing to.
075: This is the cheque number and is unique for every piece of cheque.
Date: An acceptable form of entering date is YYYY-MM-DD (year-month-day) for example 2009-11-22. Some of the cheques clearly mention how to enter the date with watermarks (faded text). If not, you have the freedom to use your own method. I personally prefer entering the date in the form of MMM/DD, YY (for example Nov/22,09). You may use other methods. If you are in doubt ask your bank about the acceptable method of entering the date.
Pay to the order of: This is the person or company who is eligible to cash the cheque (the bearer of the cheque). If you leave this space empty or enter “bearer” or “cash” then anybody can cash the cheque. If you want to cash the cheque yourself you may type in “myself” or your own name. If you type an irrelevant text such as “Happy Birthday” then anybody can cash the cheque. Be careful with this field to avoid any abuse of your cheques.
$: Enter the amount of check in the white box in numbers. If the amount includes cents then you may place a dot between the dollar an cents amounts (for example 24.32). A better method which could help reducing the chance of mistakes is to write the cents amount on top of a horizontal line extended from the middle of the last number of the dollar amount (here 4). For example
There is also a line right below the “Pay to the order of” line which you need to write the amount in letters. It is common to write the dollar amount in letters and then, the cents on top of the slash to the right of this line in numbers. However, if you write both dollars and cents in letters it is accepted by the banks.
Memo: You may add a few words which reminds you or the bearer why you have drawn this cheque. This could especially be useful to your accountant. If you own a GST account then you may be able to claim the GST you are paying (applies to business owners). In this case you may add the GST amount included in this cheque to ease the job of your accountant in the future. Click here for more information about GST.
The memo section could be used in legal disputes, so make sure filling it out wisely.
At the bottom of every cheque you see a bunch of numbers. As mentioned in the image they represent the cheque number, the branch (transit) number, the financial institution (bank) number, and your account number (the image has broken the account number into the designation number and the account number). These numbers help banks to avoid counterfeit (fake) cheques.
How to Cash a Cheque?
Cashing a cheque means to have access to the funds of the cheque. You may either get cash (paper money and coins) in return of the cheque or successfully deposit it in your bank account and be able to spend the money. In order to cash a valid cheque the date printed on it must be the same as the date of the deposit date or sometime in the past. If the date is in the future then the cheque is called “post-dated” and you cannot cash it right away. On the other hand if the cheque is more than 6 months old then it is called a “stale-dated” cheque and you cannot cash it either.
The easiest way to cash a cheque is to take it to your home branch (the branch of the bank that you opened your account with) and deposit it in your bank account. If you refer to another branch of your bank you should expect the same level of treatment. Pass the cheque to the “teller” (the person behind one of the wickets). You usually need to sign at the back of the cheque (this is called endorsement). Ask the teller if you are in doubt. The teller usually asks you to swipe your debit card in a card reader and then key in your PIN (Personal Identification Number). The process is to identify you. That is it! It usually takes less than a minute to complete the whole process.
When you deposit a cheque in your account the branch may decide to release part or all the money immediately depending on your credit and/or account type. The rest of the money will be released when the cheque is cleared (i.e. when the money is actually received by your bank). If the cheque returns (i.e. not cleared) then your bank removes the deposited amount from your account. Therefore, make sure to spend those cheques that you are quite sure they are valid.
Another method to deposit a cheque is via using an ATM (Automated Teller Machine) also known as an ABM (Automated Banking Machine) – See picture. The process is fairly simple. You need to insert your “debit card” (bank card) in the machine and key in your PIN (Personal Identification Number). The rest of the process varies from ATM to ATM but is clear from existing screen options and guidelines.
You may also take the cheque to the bank that has issued the cheque (or rather the bank of the person who has drawn the cheque). This is probably the quickest way to cash the cheque. They may however treat you differently. They need to make sure that the cheque is not counterfeit and you are the person who claim you are. Therefore they may ask for one or two pieces of ID (i.e. Identification Card) such as your driver’s license and/or passport. They may even put you on hold for a few minutes to further investigate the genuineness of the cheque and your documents (of course they would never insult you, I hope). At the end, you may ask them for actual cash or a bank draft which is equivalent to cash.
If you own a business then you usually use a “deposit slip” or a special stamp called “endorsement stamp” to deposit cheques in your home branch. This could be different from bank to bank.
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