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Cheque Usage
Although most Americans have current accounts, not all banks issue cheque guarantee cards (so cheques cannot be guaranteed up to a certain amount). Cheque theft is rife in America, so cheques are subject to far more scrutiny than in most other countries, and may be accepted only when drawn on a local or in-state bank, or by a business where you’re known personally. Most retailers have strict rules regarding the acceptance of cheques and some businesses won’t accept cheques at all, e.g. gas stations and restaurants often have signs proclaiming ‘NO CHECKS’. On the other hand, in shops where you’re well-known you may be allowed to write a cheque for more than the amount of your bill and receive the difference in cash. When paying by cheque in some shops, you must go to a special desk and have your cheque approved before going to the checkout desk. Some shops insist that customers are issued with a store ID card before they will accept personal cheques.
All cheques must be printed with your name and address. You will also need identification (ID), usually a state driving licence and one other form of ID such as a credit card, green card, passport, or employer or college ID card. You may also be asked for your employer’s name and telephone number, your social security number, and to deposit two pints of blood until the cheque has cleared.
On cheques, Americans write cents as a fraction, e.g. $107.42 is written as:
one hundred and seven 42/100
When you deposit a cheque in a bank, most banks require you to endorse it with your signature or an endorsement stamp. This must be written on the back at the perforated end of the cheque, sideways and not lengthways. Note that in America the date is written month/day/year and not day/month/year, e.g. October 12th 2002 must be written 10/12/02 and not 12/10/02.
Foreigners should be aware that US banks are much stricter than foreign banks with regard to overdrawing checking accounts, which is even illegal in some states. Many US businesses have signs stating ‘All cheques must have ID’ and there may be others stating a bounced cheque will cost you $10 to $20. If a cheque bounces, the payee will want to find you to recover the money plus administrative costs and the penalty payment charged by their bank. Most banks charge customers a fee, e.g. $5 to $25 (average $15) for each bounced cheque. It’s actually a crime to bounce cheques in many states, particularly if you do it deliberately. Californian law makes the drawer of a bounced cheque liable to three times the face value of the cheque or $ 1 00, whichever is greater, plus a re-presentation fee of around $20. It’s even possible to go to jail for bouncing cheques (unless you’re a member of Congress and use their banking facilities), e.g. in California bad cheques totalling $ 1 ,500 or a record of writing bad cheques can get you locked up. However, you can avoid a criminal record by making restitution on overdrawn cheques, paying $40 in administrative fees (plus $25 per cheque) and attending a four-hour ‘bad-cheque diversion school’ (similar to traffic school).
Cheque bouncing (or ‘kiting’), i.e. writing a cheque for more than the balance of your account, is a national sport in America, where some 400 million cheques are bounced annually. Note, however, that most banks will close your account automatically after a certain number of bad cheques have been written. The names of those whose accounts have been closed due to cheque bouncing are entered into a national database (containing details of over 7.5 million account holders). Many banks refuse to open new accounts for listed cheque bouncers. Most important of all, if you bounce a cheque you may damage your credit rating. All banks offer customers overdraft protection on particular accounts, thus protecting them from ‘inadvertently’ bouncing cheques. Overdraft protection is sometimes linked to a credit card or savings account, where the additional funds are debited to the account holder’s credit card or savings account.
After the foregoing catalogue of restrictions, suspicion and threats to your liberty, you may wonder whether it’s wise to use cheques at all. They do, however, have their uses and are handy for paying bills by mail (such as utilities), shopping at local stores and paying professionals. Find More information about cheque usage >>
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