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How To Write a Cheque in Canada: A Step-by-Step Guide

4 min read

how to write a cheque

Written By

Nick Saraev
Nick Saraev

A surprising trend persists in the ever-evolving landscape of Canadian commerce: Seven in 10 businesses still accept cheques as a viable payment method, according to Statistics Canada's Survey on Business Conditions in the third quarter of 2023.

Despite the rise of digital transactions, the ability to write a valid cheque remains an essential skill, especially when managing business expenses or personal finances.

Mastering the art of cheque writing is invaluable, whether it's to withdraw money, handle large transactions without disclosing sensitive bank account information, or simply offer a more traditional payment method.

Moreover, with Canadian banks, understanding how to effectively issue a cheque payment can safeguard you against common financial pitfalls. This includes ensuring your cheque remains valid and aligns with your financial goals. But why is this age-old practice standing amidst the surge of other payment methods?

Join us as we explore the essentialities of chequewriting in Canada. This article will guide you through each step, from filling out cheques in capital letters to securely managing your finances.

We'll also explore how to ensure your cheques remain valid and discuss alternative solutions, such as whether you can cash a cheque online and strategies for avoiding financial scams. Dive in to secure your financial savvy!

Exploring Cheques and the Relevant Banking Terms

The finance world can often feel like decoding a complex language, especially when it comes to traditional methods like chequewriting. But don't worry! We're here to break down the essentials, making sure you feel confident and informed every step of the way.

Let's explore what a cheque is and unravel some key banking terms that will accompany you on this financial journey.

What Is a Cheque?

A cheque is a written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or a specified person. In an age where digital payments are on the rise, cheques stand out for their physical form and unique security features.

They remain a preferred method to pay bills, transfer large sums, or manage business transactions without the immediate need for cash or direct bank transfers. Understanding cheques is crucial, especially when dealing with scenarios like insufficient funds or the unfortunate event of a stolen cheque.

Key Banking Terms Explained

To successfully write cheques, it's vital to grasp some fundamental banking concepts. Let's dive in:

Bank Account and Chequing Account

A bank account is your financial home base, where you can store money securely and conduct transactions. A chequing account is a specific type of bank account designed primarily for frequent access, especially for activities like withdrawing money, making purchases, or chequewriting.

While both chequing and savings accounts allow for deposits and withdrawals, the former offers unlimited transactions and typically comes with a debit card for everyday use.

Savings accounts, a broader bank category that includes investment and retirement funds, focus on long-term growth and interest accrual.

Understanding the differences between various account types, such as chequing accounts and high-interest savings accounts, can help you manage your finances more effectively and avoid issues like insufficient funds.

Financial Institution, Bank or Credit Union

These are the entities where you can open and manage your bank accounts. While banks are for-profit corporations, credit unions are member-owned and often provide more personalized financial services. Both types of institutions can issue cheques and provide services related to cheque processing as part of Payments Canada's network.

Bank Branch and Online Banking

The bank branch is the physical location of your bank or credit union where you can conduct in-person transactions. Online banking has transformed how we manage our finances, allowing us to pay bills, view cheque numbers, and transfer funds from the comfort of our homes.

Cheque Number and Account Number

Each cheque contains unique identifiers: the cheque number and the account number. The cheque number helps you and your bank keep track of each cheque issued, while the account number identifies your specific account, ensuring the money is drawn from the correct source.

These numbers are crucial for tracking your payments and managing your account efficiently. Whether you're paying bills, depositing a cashier’s cheque, or exploring different types of chequing accounts, being familiar with these concepts will enhance your banking experience and help keep your finances in check.

Preparation Before Writing a Cheque

Proper preparation before writing a cheque can save you from financial hassles and complications. Here’s how to ensure everything is set correctly:

Ensuring Sufficient Funds in Your Bank Account

It's crucial to ensure that your bank account holds enough money to cover the cheque amount. Here are a few tips:

  • Regularly monitor your account balance, factoring in any pending transactions.

  • Remember to account for any automatic payments scheduled to come out of your account soon.

  • Keeping a buffer amount in your account can prevent overdraft fees and the embarrassment of a bounced cheque.

Understanding the Types of Cheques

Different situations call for different types of cheques. Understanding when and how to use them can help you manage your finances more effectively:

  • Blank Cheque: This is a cheque with no amount or recipient filled in. While it’s crucial for specific setups, like direct deposit, it poses a risk if lost or stolen. Always store blank cheques securely.

  • Void Cheque: A void cheque provides your banking details without allowing any withdrawal. It's commonly used to set up electronic links between bank accounts for direct deposits or automatic bill payments.

  • Post-Dated Cheques: These are cheques written with a future transaction date. They are not supposed to be cashed until that date, offering a way to commit to payments in advance while retaining the funds in your account until then.

By ensuring there is enough money in your account and understanding which type of cheque to use, you can streamline your financial transactions and avoid potential issues.

For alternative non-cheque payment methods, consider learning how money orders work in Canada and how traveller’s cheques work to diversify your payment strategies.

Step-by-step Guide to Writing a Cheque in Canada

Writing a cheque is a fundamental financial skill in Canada, especially for those who frequently deal with business transactions. Whether you're transferring money, paying bills, or managing your finances, understanding how to write a cheque correctly is essential.

Let’s go through each part of the cheque to ensure you’re completing it accurately and securely.

1. Date Line: Writing the Date Correctly

The date line appears at the top right corner of the cheque. Here, you should write the current or future date. An accurate date ensures the cheque is valid and can be cashed or deposited only from the date written onwards.

2. Payee Line: Who Are You Paying?

The payee line is a critical cheque component, dictating who can receive the funds. Below are some best practices and points to remember when filling out this section:

  • Location and Label: Find the line on the cheque that starts with "Pay to the order of." This is exclusively reserved for the payee’s name.

  • Full Name or Business Name: Always write the complete name of the person or business. For individuals, include first and last names; for businesses, use the full legal name.

  • Accuracy is Key: Any mistake in this section can lead to the cheque being rejected or returned. Double-check the spelling and details of the payee's name.

  • Clarify Uncertainties: If you are unsure about the correct name, contact the individual or company for confirmation before completing the cheque. This step prevents potential delays in payment processing.

  • No Nicknames or Abbreviations: Avoid using nicknames or abbreviations. They can lead to confusion or make the cheque invalid.

  • Legibility: Write clearly and legibly to prevent any misunderstandings or fraud. Illegible handwriting can lead to misinterpretation and misuse.

  • Record-Keeping: Note the recipient in your cheque register or financial records for easy tracking and reference.

3. Numeric Amount Box: Entering the Dollar Amount

Next to the dollar sign on the cheque, enter the amount you’re paying in numerical form. This box is crucial because the bank uses this amount for the actual transaction. Ensure clarity by writing close to the dollar sign to prevent fraudsters from adding numbers. For example, if you’re paying five hundred dollars, write “$500.”

4. Written Amount Line: Spelling Out the Amount

The written amount line on a cheque is essential for confirming the payment's value in words, complementing the numeric figure entered in the box. Here's how to approach this section, with two examples to guide you:

  • Start from the Left: Write directly after the currency symbol or word to leave no space for fraudulent alterations. Write legibly to avoid misunderstandings.

  • Use a Fraction for Cents: When including cents, write them as a fraction of 100 to ensure clarity and legal correctness.

  • Line Extension: After writing out the amount, draw a horizontal line to fill any remaining space. This prevents unauthorized additions to the amount you've written.

Let’s look at two examples.

Example 1

When writing a check for $850.50, you would start by clearly inscribing the amount with the words "Eight hundred fifty" to indicate the dollar amount.

These words must be the first information written on the line following the currency symbol to ensure clarity. It would be immediately followed by "and 50/100" to accurately represent the cents.

Consequently, the completed written amount on your cheque should appear as "Eight hundred fifty and 50/100————," with the dashes extending to the end of the line.

Example 2

In the case of a cheque written for $1,235.25, the process is similar but with the corresponding amounts. Begin by writing "One thousand two hundred thirty-five" right after the currency sign to stand for the dollar portion of the amount.

The cents should read "and 25/100." After writing, the finished product would look like "One thousand two hundred thirty-five and 25/100————." To secure the written amount against any modifications or unauthorized changes, draw a continuous line from where your text ends to the rightmost end of the available space.

Completing a cheque with precision and extending lines to the fill space demonstrates attention to detail and adds security to the financial instrument, making it harder for anyone to fraudulently alter the written amounts.

Following these steps ensures that the written amount matches the numerical amount, reducing the risk of fraud and making your cheque legally binding.

5. Memo Line: Adding a Note or Reference

The memo line at the bottom left is optional but helpful for noting the cheque's purpose, like “Rent for March” or invoice numbers. This can assist both you and the payee in keeping track of the payment and can be particularly useful for your plans for spending and saving.

6. Signature Line: Authorizing the Cheque

Your signature on the bottom right line authorizes the transaction and validates the cheque. Sign as you do on bank documents to avoid issues with cheque clearance. Remember, a cheque without a signature is invalid.

Writing a cheque involves responsibility and attention to detail. Ensure your bank details and account number are correct, and protect yourself from overdraft fees by considering overdraft protection coverage.

Also, understand alternatives like virtual credit cards and the security of options like exploring the safety and security of money orders. Familiarizing yourself with these components makes your chequewriting secure and enhances your overall financial literacy.

Special Types of Cheques and Their Uses

Understanding the different types of cheques and their specific applications can help you manage your money more effectively. From personal cheques for everyday use to bank cheques for significant transactions, each has its purpose.

Personal Cheques vs. Bank Cheques

Individuals issue personal cheques from their chequing accounts at institutions like TD Bank. They are a common way to pay bills, lend money, or make purchases directly from your specific bank account. However, personal cheques rely on the account holder having enough funds and may take a few days to clear.

In contrast, bank cheques, also known as cashier’s cheques, are issued by the bank itself, guaranteeing the funds because the bank holds the amount until the cheque is cashed. This type of cheque is often used for significant transactions where trust is essential, such as buying a car or making a large deposit.

Premium Bank Accounts and Unlimited Transactions

Many institutions, including TD Bank, offer premium bank accounts and cater to customers seeking more from their banking experience. These accounts often come with perks like unlimited free transactions, including cheque writing and processing.

The feature is particularly beneficial for individuals or businesses that handle a high volume of transactions monthly, reducing the costs associated with each cheque written.

Rent Payment and Cheque Payments

For many, rent payment is a significant monthly expense, and paying by cheque is still a prevalent method, especially in traditional rental markets. Cheque payments for rent provide a tangible payment record and can be easier to track than cash.

However, ensuring your account has enough funds to cover the cheque to avoid non-sufficient funds (NSF) fees and maintain a good relationship with your landlord is essential.

Direct Deposit vs. Electronic Payments

While cheques remain popular, there's a growing shift towards direct deposit and electronic payments, particularly for recurring expenses like salaries or rent. Direct deposit eliminates the need to deposit cash or borrow money to cover cheques before they clear.

Electronic payments, facilitated by services like KOHO for businesses, offer a quick, secure, and paperless way to transfer money directly between bank accounts. They streamline the payment process and reduce the need for physical cheques.

Managing Your Cheques and Chequing Account

Effectively managing your cheques and chequing account is crucial for maintaining financial health and ensuring smooth transactions.

Whether it's keeping track of your spending, understanding the status of each cheque, or knowing when a cheque becomes stale-dated, proper management can save you from potential fees and misunderstandings.

Recording in the Cheque Register

Recording the details in your cheque register is essential every time you write a cheque. The entry includes:

  • The cheque number

  • Date

  • Payee

  • Amount

  • Purpose

Maintaining an up-to-date register allows you to track your spending, monitor outstanding cheques, and ensure that your account balance reflects all your transactions.

It's important to reconcile this register with your bank statements regularly to catch any discrepancies early and understand your financial position.

Reviewing Cheque Payments and Withdrawals

Regularly review your cheque payments and withdrawals to ensure that all transactions are accounted for and that no unauthorized transactions have occurred. Keep an eye on your bank account to see when cheques are cleared, which can take a few business days.

Be aware of your financial institution number and bank number. These are crucial for identifying transactions related to your account. Monitoring these can help prevent overdraft fees and ensure you have the funds immediately available.

Understanding Cheque Validity and Expiry

In Canada, a cheque is typically considered valid for six months after the date written. After this period, it becomes "stale-dated." Some financial institutions will still process older cheques but are not obligated to.

Therefore, it’s important to manage outstanding cheques and follow up with payees who have not cashed them within a reasonable time. Remember the terms regarding stale-dated cheques, as they vary between banks. Some may return these as unpaid, leading to financial complications.

Always ensure your cheques are cashed or deposited within these six months to avoid issues with stale-dated cheques.

Safety and Security Measures

Ensuring the safety and security of your financial transactions, especially when using cheques, is crucial to protect against fraud and scams. Here’s how to maintain security and privacy in your financial dealings.

Avoiding Financial Scams and Fraudulent Cheques

Always be vigilant about financial scams and the risk of fraudulent cheques. Verify the source of any cheque you receive, especially if it's from an unknown entity.

Be wary of cheques with requests to send a portion of the funds elsewhere, as this is a common scam tactic. Contact your financial institution immediately if you suspect a cheque might be fraudulent.

Ensuring Cheque Security and Privacy

Follow the best practices for ensuring your financial security.

  • Store your cheque book securely, treating it as a sensitive document.

  • Avoid pre-signing cheques to prevent misuse.

  • Use a pen with indelible ink when writing cheques to deter alterations.

  • Fill out cheques fully and clearly, ensuring no empty spaces are left.

  • Regularly check your bank statements and compare them with your cheque register to identify any irregularities.

  • Immediately report any lost or stolen cheques or chequebooks to your bank to block unauthorized access and prevent potential financial loss.

Advanced Cheque Writing Tips

Understanding some advanced cheque management practices can enhance your financial security and efficiency.

Writing a Post-Dated Cheque Early

When issuing a post-dated cheque, ensure the future date is clearly marked to prevent early cashing. Inform the recipient about the date to avoid confusion. Banks may not always notice the date, so communication is key.

Dealing with Cheque Cancellation and Stop Payment Requests

To cancel a cheque, quickly contact your bank with the cheque's details to request a stop payment. Be aware that there might be a fee for this service. Swift action is essential to prevent unwanted cheque clearance.

Withdraw Cash and Cash Cheques Responsibly

Exercise caution when withdrawing or cashing cheques. Confirm cheque legitimacy and be conscious of your surroundings when carrying significant cash. Opt for secure environments for these transactions, like inside bank branches or at trusted ATMs.

Alternatives to Writing a Cheque

There are quite a few alternatives to writing cheques that are convenient and enhance financial management and security. Online payments and electronic transfers have become increasingly popular, allowing individuals and businesses to send money quickly without needing physical cheques.

Platforms likeKOHO for businesses provide secure and efficient online transaction methods. These alternatives significantly reduce the need for mobile deposits and the physical handling of cheques, streamlining the payment process.

For those who still require a physical payment, cashier’s cheques and money orders are secure alternatives. Unlike personal cheques, these are prepaid, eliminating the concern over whether the account has enough funds.

Direct deposit is another excellent option for regular payments, such as salaries or recurring bills. It ensures funds are transferred directly into the recipient's account, reducing the need for writing cheques and handling cash.

These methods simplify transactions and helpbuild your credit with KOHO and other financial tools, offering a more streamlined and secure approach to managing finances.

Final Thoughts

Cheques remain a vital tool for managing finances in Canada, offering a tangible way to control transaction fees, borrow money, and pay for significant expenses like tuition fees.

However, as payments in Canada evolve, alternative solutions like electronic transfers and direct deposits provide efficient and cost-effective options. Balancing traditional cheque usage with these modern methods ensures a comprehensive approach to financial literacy and management.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!

Nick Saraev

Nick is a freelance writer and entrepreneur with a particular interest in business finance. He's been featured in publications like Popular Mechanics and Apple News



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