What Are the Different Types of Cheques?

What Are the Different Types of Cheques?
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Most people used to rely on personal cheques to purchase items. A cheque -- or check as it is spelled in the U.S. -- is a signed, written document that orders a financial institution or bank to pay a particular amount of money to the payee from the signer of the check. Although most people nowadays rely on debit cards to access money and pay bills, there are still a variety of checks that exist within financial institutions.

Cashier’s Cheques

To obtain a cashier's check, a customer pays a bank the face value of the check along with a service charge. The check is drawn on the bank’s or financial institution’s funds. A bank representative signs the check and makes it payable to a payee. It features the name of the payee and the name of the remitter, the person who paid for the check. You can use a cashier’s check to pay for items rather than a personal check. It guarantees that the money is available.

Bounced Cheques

A bounced check is a check that a bank cannot process due to insufficient funds in a personal bank account. The bank returns the unpaid check to the writer of the check and charges a fee to the person’s account. Most people bounce checks inadvertently because they are not aware that their account balances are low. Other terms for bounced checks include bad checks, dishonored checks and rubber checks.

Certified Cheques

Some people request a certified check for payment when unsure of a person’s creditworthiness or when they do not want the check to bounce. A certified check guarantees that the writer of the check has enough funds in his account to transfer when the check is submitted by the payee. In addition, it guarantees that the bank account holder's signature is genuine.

Traveler's Cheques

People on vacation typically opt for traveler’s checks. They are an alternative to carrying cash in a foreign country. In addition, traveler’s checks are usually replaceable within 24 hours if lost or stolen. Traveler’s checks are available in different types of denominations and currencies.