how to read a cheque?

How to Write and Read a Cheque

We are occupying a strange time in the financial realm. While many services are moving to an online format, some traditional banking tools are still used regularly. One such example is the personal cheque.

Whether it’s used for paying rent or making an unusually large purchase, there are many instances that an individual may find themselves turning to a cheque. However, you may find the process of both readings and filling out a cheque mystifying. But you’re not alone!

In this article, we’ll teach you how to read a cheque as well as how to write one so that you can achieve a level of complete financial and banking literacy.

Table of Contents

How to Read a Cheque: A Step By Step Guide

Have you ever picked up a cheque and noticed that there were small numbers written across the bottom? Maybe you have noticed that these numbers are a bit harder to decipher than regular numerals. Fun fact: this alien-looking font has a name — E13B — and it is exclusively used on North American cheques.

This was originally designed so that the machines of decades past could differentiate between numbers more easily when reading a cheque. The line of numbers is called the MICR line, which stands for Magnetic Image Character Recognition.

Thankfully, the MICR line is decipherable to humans too. This is important because there are many instances when you may need to be able to read those numbers, such as when you are authorizing a direct deposit into your account or a repeating withdrawal.

Although American and Canadian cheques both use E13B, they are not read the same. This article specifically focuses on how to read a cheque in Canada.

So, here’s what these so-called alien numbers tell us, earthlings.

1. Cheque Number

The first set of numbers is your cheque number. This identifies the cheque itself. Simple enough, right?

2. Transit Number

Next, you will see your cheque’s transit number. You may see it also be called a branch number but it is the same thing and will always be composed of five digits.

This number will indicate where your home branch is, i.e., the branch where you first opened your bank account.

No matter how long it has been since the opening of your first account, your transit number will always stay the same as long as you stay with the same bank.

3. Institution Code

Institution codes, aka institution numbers, simply identify the bank that an individual is set up with. It will be the same for all customers of a bank.

For example, for customers of TD Canada Trust, the institution code will be 004 across all cheques.

4. Account Number

Account numbers are exactly what they sound like — the number that identifies your bank account within your financial institution. Your bank account number is the longest number on the cheque with usually seven digits at minimum.

Bonus: Route Number

If you are used to reading American checks, you may be wondering where the route number is on a Canadian cheque.

In Canada, the routing number would be a combination of your five-digit transit number and three-digit institution code.

How to Write a Cheque

Now that we know how to read a cheque, let’s tackle the proper way to go about writing one.

Much like writing a letter, the ability to write a cheque may seem like a bygone skill that you no longer need to pay attention to.

However, even in today’s increasingly digital world, there are times when you may need to rely on a cheque to perform a large transaction or pay a bill. Here’s a step-by-step guide to foolproof cheque writing.

1. Write in the Date

First, write the date. You’ll find a spot for this in the top right corner of the cheque where it says “date.”

You will generally want to use today’s date, i.e., the date on which you are signing the cheque. The exception to this is if you are filling out post-dated cheques. If you enter a date that is in the future, the cheque cannot be cashed until this date arrives.

2. Write in the Recipient's Name

Next, you will want to turn your attention to the line that says “Pay to the order of.”

Here, you will want to fill out the name of the person who will be cashing the cheque.

It is important that you spell the recipient’s name correctly. If you are writing a cheque to a company, ask them what their preferred name would be.

3. Write in the Cash Amount

In the location where there is a dollar ($) sign symbol, write the numeric amount that you would like the cheque to be for.

You will need to include two decimals no matter how small or large the amount is.

For example, if you are writing a cheque for $1,050, you would write it as $1050.00. In the unlikely event that you are writing a cheque for fifty cents, you would write it as $0.50.

4. Write in the Cash Amount in Words

You will also need to write the amount that you are writing a cheque for on the second line in actual words. Since you will be writing the dollar amount down to the cent, you will use “/100” to clarify the exact amount that you are authorizing to be withdrawn.

So, for the amount of $1050.50, for example, to write the cheque amount in words, you would write “one thousand and fifty dollars 50/100 cents.”

Most people will draw a line between the words and the last cents as a security measure so that the cheque amount cannot be meddled with.

5. Sign the Cheque

Finally, it’s time to sign the cheque. This is a small but very important step, so give it your best Hollywood sign.

6. Optional: Fill in the Memo

Optional: you can now fill the memo section if you would like. For example, if your cheque is for rent, you could write “October rent.”

Our Final Thoughts

Reading and writing a cheque isn’t fun — we don’t see ourselves signing up for recreational cheque reading league anytime soon.

However, like other necessary skills in life, it is highly beneficial to know how to make the best of every banking tool that is at your fingertips.

Knowing the ins and outs of using a cheque is arguably just as important as knowing how to use credit cards or the purpose of a savings account.

Here’s to never being teased by the older generation for your lack of chequing skills again.

Frequently Asked Questions

As the majority of us do not use cheques very often, it is common to wonder whether or not our chequebooks expire. The good news is that chequebooks on their own do not expire.

However, once you have written a cheque, it’s important to know that it usually has six months before it turns “stale.” This means that your payee has six months to present it to the bank before it is considered expired.

The cost of a cheque book will depend on your individual bank. The average cost of a cheque book in Canada will be anywhere between $25 on the low end and $70 on the high end.

There will usually be 25 cheques in each individual cheque book, although there will sometimes only be 10. A bank will often issue you multiple cheque books at a time. Check with your individual bank for cheque book particulars.

This is a great question! There’s no doubt that e-transfers forever changed the way we bank from the day they were deployed.

However, while we love the instant nature of e-transfers, they won’t be convenient in every situation.

For example, many banks place limits on how much money you are able to send via e-transfer. A cheque, on the other hand, will not have monetary limits.

In addition, e-transfers are not mandatory. Not everybody uses them, but everyone has the ability to deposit a cheque. Some transactions may also just require the use of a cheque only.

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