A bank check is a negotiable instrument issued by a bank to pay a specified sum of money to a person upon demand. It is in the form of a written order and is drawn against funds deposited in the bank. Bank checks are also known by different names such as a cashier's check, teller's check, and treasurer's check. They are primarily used to send monetary gifts, settle subscriptions, and make payments for goods bought.
Bank checks generally contain information such as the name of issuing bank, name of payee, date of issue, signature of drawer, and amount of money. The amount should be specified both in numeric and written format. In addition, bank checks include check number known as bank routing number. Also called ABA number, a bank routing number usually has nine digits and is printed on the MICR line, across the bottom of the check.
Bearer checks, certified checks, crossed checks, and order checks are among the different types of bank checks. The key feature of a bearer check is that it is paid to the bearer or the person holding the check, and it usually contains orders such as "pay cash." A certified check is a personal check whose payment is guaranteed by the bank on which it is drawn. Crossed checks carry across its face two parallel lines with instructions such as "not negotiable" or "account payee only" between them. Such checks can only be paid into a bank account and cannot be paid over the counter. An order check is paid to a person whose name is written on the check.
One of the prime features of a bank check is that it can be transferred to a person other than the payee specified in the check, through a process known as endorsement. It is done by putting a signature on the back of the check, thereby legally transferring the ownership of the check to some other person. Sometimes, a bank check is returned or dishonored due to reasons such as incomplete information, a discrepancy in amount, and a difference in signature. Also, if there isn't sufficient money in the bank account, bank checks are returned. Such bank checks are called "bounced checks," and you have to pay a penalty for the returned check.