Safety tips on cheques and drafts

Bank cheques

A cheque is a voucher that can be used as cash. This is considered to be the most safe method of making payment to somebody. The account holder has to mention the amount and name of the receiver in the cheque leaf. He then has to sign the cheque. The receiver gets the payment when the cheque is presented to the bank. The bank makes the payment to the receiver from the account holder of the person signing the cheque. There are a number of different types of cheques in use. They are-

Open cheques. With these one can get immediate payment when the cheque is shown to the bank counter. The receiver can get the amount deposited in his account too.

Cashed cheques. There is a danger of open cheques being robbed and misused. This danger can be averted through cashed cheques. Through a cashed cheque only the person whose name has been specified on the cheque can get the payment. Usually there is a logo 'account payee not negotiable' on the cashed cheque.

Bearer Cheques. With this cheque any person can receive the payment at a bank counter. This is not safe from the point of view of safety as it can be misused by anyone if it is lost.

Order cheques. This cheque can be transferred to a third person by the person receiving the payment.

Anti dated cheques. In this cheque the date on the cheque is set prior to the date the cheque is presented to the bank for payment.

Post dated cheques. This is a cheque on which the date on the cheque is set on a future date.

Bank Drafts

Bank drafts are a kind of cheque which certify that the person making the payment has ample amount in his bank. The bank accounts of the persons requesting to make a bank drafts are verified. This is to see if the person has adequate amount in the bank. Bank drafts are generally used for big amount transactions. Bank drafts are used when one bank has to deal with another bank to process payments. Bank drafts are also issued when the receiver is in another city or country. There are three kinds of bank drafts namely-

Cashier's cheques. This is a kind of bank draft. You have to pay the required amount to the bank and the bank will deposit the amount and even charge you a small fee. Then it is the bank's responsibility to make payment to the receiver.

Certified cheques. This is another form of bank draft. You can get a certified cheque only from a bank in which you have an account. The bank takes a small charge on the issuance of a certified cheque. There is no provision of stamp payment in certified cheques.

Money orders. This is also a kind of bank draft which is the most used. The procedure followed for money orders are different from cashier's cheques and certified cheques.

There is a stamp provision payment available in money orders. The biggest drawback of money orders is that once can use it for paying small amounts only.

Making payments by bank drafts is the easiest method of making payments to somebody. The biggest advantage in drafts is that both the parties need not worry about the cheque bouncing.

Demand Drafts

Demand Drafts or DDs are another facility used to transfer cash. The person applying for a DD has to fill up a form in which he has to specify the senders name, receivers name, location, amount to be sent etc. A person making payment above Rs 10,000 has to quote his PAN card details.

Safety tips on cheques and drafts

Bank cheques

Bank Drafts

Demand Drafts

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