Contributed by Maine Credit Unions

Checks used to be by far the most popular alternative to cash in the U.S. In 1979, at its height of popularity, 86% of all non-cash payments were made by check. But since the mid-1990s, American consumers have turned to credit or debit cards as a cash alternative. In recent years, payment apps and digital wallets have further contributed to the decline in use of written checks. However, there are still circumstances where someone will either receive or need to write a check, so it’s important to understand how to fill one out, and important for people to recognize the different types of checks that are available. 

Personal checks 

A personal check is a slip of paper issued by a person’s financial institution that draws funds from their checking account. The printed blank check includes their financial institution’s routing number and their account number. When it’s time to write a check, fill out the date, name of the check recipient, and the amount, and sign on the signature line. When someone pays an individual or business with a personal check, their financial institution transfers the money to the recipient’s account or to wherever it is being cashed. One major flaw for personal check recipients is that there is no guarantee that the account from which a check is written has enough funds to cover the amount. If someone tries to cash a check from an account with insufficient funds, the transaction will fail, an event known as ”bouncing.”  Then the recipient and check writer may both be charged fees. This can be especially upsetting for the recipient, who may not only face a fee, but won’t receive the funds they were expecting from the check. 

Cashier’s checks 

These are sometimes referred to as bank checks or official checks, and require a bank teller to withdraw funds from a person’s account, and then the teller writes a check in the name of the financial institution. Because the funds have been guaranteed by the financial institution, a cashier’s check won’t bounce. This check is less risky for the recipient and is often preferred when making a large payment. When requesting a cashier’s check, a person should expect to pay a fee of $5 to $10. 

Traveler’s checks 

Those who travel a great deal may be familiar with traveler’s checks. These are checks that are both prepaid and insured, and can be used instead of cash in most hotels or stores. The checks allow the traveler to convert money into the currency accepted at their destination. This reduces the risk of having to carry a large amount of cash to be exchanged (often for a fee) in the country being visited. The insurance guarantees that any stolen, lost, or damaged checks  will be replaced. Because of these unique benefits, they are often preferred over credit cards when traveling. 

Bearer and blank checks 

Both of these checks are rare, as they pose a significant risk for the check writer. A bearer check is a personal check written out to “cash” instead of a recipient’s name. That means anyone in possession of the check can cash it. A blank check is a personal check in which the check writer did not write in the payment amount. The recipient can then write in the amount themselves and cash it. Someone could easily take advantage of these kinds of checks and there is no protection. Sometimes people use blank checks when paying someone for something without knowing what the exact amount will be, such as gas for a friend’s vehicle, or groceries. But these checks can be a liability, so think twice before cutting a blank check. 

Contact your financial institution with questions about how to write a check, to order checks, or to ask which checks are best to write or accept.