What Is A Personal Check And How Does One Actually Work?
Personal checks aren’t as common as they used to be, but they still have their uses, especially for payments you can’t make any other way.
It’s not something you see very often, but you might wonder, “What is a personal check, and do they still have a use?”
Personal checks are still a great way to make payments. And while you may not write them often, it’s a good idea to have a checkbook available should you need to pay using methods other than electronic payment.
KEY TAKEAWAYS:
- Personal checks are a form of payment that transfers money from your bank account to the recipient’s bank account (or cash).
- You must complete a personal check and sign it for it to be honored.
- Alternatives to personal checks include debit cards, credit cards, and money transfer apps like Venmo and Zelle.
What is a Personal Check?
Have you wondered what is a personal check and how do they work? Maybe you wonder if they are necessary since there are many other ways to pay today.
A personal check is a simple way to pay from your personal checking account. It’s a slip of paper that you must complete and give to the party you are paying, who cashes it at their bank.
The check is a promise to pay the amount stated, and the bank cashes it to transfer the funds to the proper party.
What Information Goes on a Personal Check?
A personal check has some pre-printed information, including your name and sometimes your address if you like.
It also includes the bank’s routing number, which is your bank’s identification (like an address) and your bank account number. This is how the bank knows where to withdraw the funds.
The remaining information you must complete yourself, including:
Person or company receiving the funds – This is the person you write the check to and the only person who can cash it. When the receiving party brings the check to the bank, they must provide identification.
Amount of the payment – This is the amount you’re paying the person or company. You’ll write it as a number and in word format.
Your signature – Once you sign a check, it can be cashed. It’s important to ensure the intended party receives it.
On the check, you must enter the dollar amount in numbers and written format.
For example, if you wrote a $100 check you’d write $100 in the box, and write out ‘one hundred dollars and zero cents.’
Reasons to Write a Personal Check
Sometimes personal checks are the best way to take care of a payment. Common times to use them include:
- Making your housing payment, such as rent or your mortgage
- Sending money in the mail
- Giving financial gifts
How to Cash a Personal Check
If you receive a personal check, you have a few options to cash it, including:
Cash it at the issuing bank – If the issuing bank has branches near you, it’s easy to cash the check there, even if you don’t have an account.
Cash it at your bank – You can cash a check at the non-issuing bank, but you must have an account with enough funds to cover the amount of the check in case it bounces.
Cash it at a retail store – Some retail stores offer check cashing services for a small fee.
The Pros Of Personal Checks
No fees: Some vendors charge a convenience fee if you pay electronically but don’t charge a fee if you pay via check. This reduces the fees you pay and your overall expenses.
Easy to protect: If you lose a check, you can contact the bank to stop payment on it. But if you lose cash, there is no way to prove you lost it, so you won’t get it back.
Provides proof of payment: If you need to prove you made your payment, a canceled check (meaning the receiver cashed it), serves as your proof.
The Cons Of Personal Checks
Their cost: Most banks charge a fee for personal checks. You only pay the fee to receive a book of checks, but they aren’t free, like a debit card.
It takes longer to process: It takes a while to process checks, making balancing your checkbook more challenging.
Other Ways to Pay Besides a Personal Check
Personal checks are one way to make payments, but not the only way. Here are other options.
Pay with a Debit Card
You can make payments with your Visa or Mastercard debit card, usually over the phone, online, or in person.
A debit card works like a credit card, with an exception: the money comes out of your checking account instead of a credit line. Make sure you have enough funds in your account to cover the payment to avoid overdraft fees.
Pay Electronically
Many banks offer electronic payments through Zelle. You can also sign up for Venmo or the Cash App. These apps make it easy to transfer funds to friends, family, or pay for purchases if the company accepts that form of payment.
Pay with a Credit Card
You should only use credit cards when necessary because it’s easy to get into debt with them. Credit cards have a credit line you can use but must repay. If you carry a balance, you’ll pay interest on it, leading to excessive debt and the need for debt consolidation.
Some Final Thoughts On Personal Checks And Using Them
As mentioned earlier, personal checks aren’t as common as they used to be, but they still have their uses. Having checks available is important, especially for payments you can’t make any other way.
Many people prefer paper checks when gifting money since cash can be lost or stolen, especially in the mail.
Personal checks are also great for paying certain expenses, such as housing costs, and give you proof of payment, which is essential when keeping track of your finances.
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