Philip Newton (pne) wrote,
Philip Newton

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Checks and balances

A question for the American readers of my journal: How do cheques/checks work in the States? (I see HowStuffWorks has an article about this, but it's fairly short.)

From what I hear, cheques are a very frequent method of payment over there, for paying for groceries, paying your credit card bill, paying authors ("The Czech's in the male!"), and so on. But in German, I'm not used to using cheques much; I think they've become even rarer recently now that eurocheques (with a guaranteed balance) don't exist any more.

I would say that most people, if they don't pay cash, use ec cards in shops and direct money transfers (either direct debit or a real transfer) for other things, e.g. ordering things via mail, paying rent, or the like.

Do American checks have to be written out on special forms issued by the bank? Or are there "neutral" forms you can use regardless of which bank you choose?

When you write out a check, what happens to it? I gather that the person receiving it deposits it with his bank, then the piece of paper gets sent to your bank, your bank pays theirs somehow, and you get back the check?

When you receive a check from someone else and deposit it, is your bank account credited with that amount immediately? Or do you have to wait? For how long? Does the length of time depend on whether you're using the same bank as the issuer?

When you deposit a check, do you get cash? Or do you have to deposit it in an account? Or can you do either? Are there different kinds of check for each? (I know that in Germany, there are "Verrechnungsschecks" which can only be deposited, not exchanged for cash, but mostly people turn an ordinary cheque into a Verrechnungsscheck by drawing two diagonal lines across the top left corner and, optionally, writing "Nur zur Verrechnung". Apparently, those are safer especially if they get stolen, because you can tell where the money went since there's a name behind the account.)

I'm especially curious about the "getting it back" part, since I've never heard of that in Germany; I think I'd simply expect to see an amount deducted from my next bank statement. Is the check crossed out or cancelled somehow when you get it back? Can you tell who deposited it, in which bank, or on what date? Can you tell whether a check was never cashed? Does the check get sent to you by postal mail? With your bank statement or separately?

What does "balancing your checkbook" mean? Does it refer to taking the cancelled checks you got sent bank and cross-referencing with the deductions on your bank statement? Or do you keep track of issued checks on a form the bank provides you and you tick them off when the check has been cashed? Or what?

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