Bank Check Information
Bank checks are often used as a secure method of payment, and may be requested instead of a personal check in situations where large amounts of money are being exchanged. This is meant to protect the person receiving the check from being given a personal check that might bounce when they try to negotiate it. Understanding what a bank check is and how to use it can help you make educated decisions when paying or receiving money in this form.
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Definition
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Investopedia states that a bank check, in its simplest form, is "a check written by a financial institution on its own funds." A bank check may also be referred to as an official check, a teller check, a cashier's check or a bank draft. In each case, these names refer to a financial instrument issued to a customer that is drawn on the bank's accounts. This shows the person receiving the check that it is guaranteed by the bank.
Requirements
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In order to obtain a bank check, you must first give the bank the funds to make it. This could be cash or a withdrawal from an account you hold with the institution. The bank will not accept a personal check drawn on another bank as funds for a cashier's check, because it cannot immediately collect the money. By accepting only collected funds for the check, the bank guarantees that it will have the funds on hand for the person to whom the check has been written.
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Fees
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For the service of creating a bank check, most institutions will charge you a fee of $5 to $10. Your bank may offer special checking accounts for seniors or for people who keep high balances that have the added benefit of allowing you free bank checks. Ask your bank for details and the specific requirements of any such account.
Security
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The security features on the bank check itself contribute to the sense of safety and security associated with official checks. If you receive a bank check as payment, check those features for authenticity. The check will have a paragraph on the back that describes such safety features as micro-printing, heat-sensitive paper, hologram seals, and a background that reads "void" when photocopied.
Considerations
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Bank checks are generally a very safe financial instrument to use and accept. However, some fraud schemes are meant to take advantage of the feeling of security associated with such checks. While it is difficult to create a counterfeit cashier's check, it is not impossible. Therefore, it is a good idea to verify the check with the bank that issued it. Call a customer service number for the bank found in the phone book or on the Internet--not on the check itself as this is likely to be a fake number if it is a fake check--and ask the bank to verify funds before you cash or deposit the check.
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