What is Bank Check? – Types, Forms of Issuance, and More
What is Bank Check?
A bank check is a document that uses as a means of payment by which a person (drawer) gives the order to a bank (drawee) to pay a certain amount of money to another person or company (beneficiary).
The bank check characterizes in that the person who signs the statement is the bank that will pay it, that is, in this case, the bank is, at the same time, the drawer and the drawee.
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What are the Types of Bank Check?
1. Bank Check Credited to an Account
It can only collect by crediting the money to a bank account, never in cash. It must include the expression “Account paid.”
2. Crossed Bank Check
Two lines cross diagonally on the check, which can only cash by crediting the account. The purpose of these crossed lines on the review is to avoid the risks posed by its loss or theft since it cannot cash by anyone who is not authorized to do so.
3. Conformed Bank Check
The financial institution assures the beneficiary that the person who issues the check will pay it and has sufficient funds. It does through expressions such as “seen,” “conformed,” etc., and the drawer’s signature.
4. Personal Bank Check
It issues in favor of a specific natural or legal person, who will be the only one authorized to cash the check.
Forms of Issuance of Bank Check
To the Bearer: anyone who presents the check can cash it.
Nominative: it can only collect by the natural or legal person whose name appears on the check.
It can be endorsed that the right of the collection transfer to a third person. For this, the beneficiary writes his name on the check and signs it.
To the Order: expressly allows the endorsement of the check.
Not to Order: it prevents its endorsement to a third party.
Cross Check: can only be cashed by crediting the check to a bank account.
How Should a Bank Check be Paid?
The check must pay at the time it is presented for collection. The deadlines to present checks for collection regulate in the Commercial Code:
- Fifteen days from the date of issue, if paid in the same place where it was issued.
- One month, if it pays in a different place to that of its expedition but in the same country.
- The check must pay in full, but there must be sufficient funds in the drawer’s account for this. If the review did not pay for unjustified cause, it might be cause for sanction.
How Much Does Cost to Write a Bank Check?
In general, the writing of personal checks is much cheaper than the delivery of bank checks. The former can often issue for free. Its case is different since, in most cases, it has an average cost of 0.4% interest on the amount of the review with a minimum fee of more than 10 euros.
What is the Use of Bank Check?
It has lost popularity in recent years in favor of other payment means such as transfers or SEPA debits. In many cases, its use restricts to the professional field, and it is becoming increasingly strange to see someone extending a check to another individual.
Difference Between Bank Check and Conformed Check
There is a common confusion between the concepts of a bank check and a written check that should be clarified. The bank issues the first, and it is responsible for its payment. In the second case, the individual or company publishes it, and the bank only confirms that there are funds to pay it.
Although both guarantee the payment, the first one always does it since it is the bank itself that issues it. In the second, a series of payment conditions are given, with limits on the amount and usually a maturity.
It is a type of check-in in which the drawer and the drawee coincide and are the bank that issues it. In this way, the collection guarantee by the bank itself.
It is, for all practical purposes, like any other. The main difference is that the bank, not the individual or company, issues it and is responsible for the collection. For this reason, this type of check has a guarantee of assembly greater than an ordinary one.
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