Checks are one of the available option payments for you. Even with the advent of a digital wallet, checks are still being widely used. For a lot of consumers, opening a checking account may be complicated considering the different parts of a check labeled. This is why we are sharing this post with you, to help you understand and be familiar with the different parts of a check and what do those numbers represent.
But, first, before we get into the parts of a business check and the parts of a personal check, allow us to let you know why it pays to open a checking account.
The Benefits of A Checking Account
Regardless if you are just in the process of establishing your financial literacy or you already have a well-established financial landscape, here are the benefits that you will experience once you open a checking account:
- In order for you to build a good credit score, you need to maintain a checking account. Just remember to avoid issuing checks with insufficient balance, to pay your bills on time, and to keep your balance above zero. If the time comes and you need to apply for a loan, one of the first things that lending corporations would look into is how you manage your checking account.
- You earn a higher interest rate. If you choose the high-yielding checking account, you will enjoy a higher interest. Yes, the minimum balance is higher, but if you will look at a bigger picture, you will actually save more.
- Using a check as a form of payment can establish an electronic trail. If you pay in cash and you were not issued a receipt, there’s no way you can prove your payment. On the other hand, a canceled check is a valid proof of payment.
Now, there are two types of checking accounts namely a business check and a personal check. If you are not yet familiar with the differences between the two, allow us to brief you:
- A business checking account has limited free transactions
- Cash counting may apply if you open a business checking account
- A business checking account have advanced methods of payments like the ability for credit card payments
- Personal checking accounts have lower fees which, in some instances, can also be waived. In the case of business checks, fees are never waived.
How Are Business Checks Differentiated from Personal Checks?
So as to know the parts of a check labeled, you need to understand how the appearance of a personal check is different from a business check.
First, the size of a personal check can be likened to the size of the paper currency of the USA. It can easily fit into a standard-sized wallet. It is also available in different colors. On the other hand, business checks are bigger. This is because these checks are used or recorded in accounting books.
Second, personal checks have fewer security features than the business checks such as holograms and watermarks. Plus, the business checks have a bigger memo line, a bigger payee area, the signature part can allow for two signatories, and the business checks are made to fit into the size of a double window mailing envelope.
The Different Parts of A Check Labeled
For your thorough understanding of a check, here are the parts of a check labeled and what do these numbers represent:
Parts of a personal check explained:
We highlighted the numbers so we can explain to you in a more concise way what each number represents.
1. Contact information
On the upper left-hand corner of a check, you will find the basic contact information of the amount holder such as full name and complete address. If it is a joint account, what you will see are the two names of the account holders.
2. Payee line
The blank ‘pay to the order of’ is for the person or the organization to whom you wish to send the payment. In short, this is one of the parts of a personal check wherein you are ordering your bank to deliver the funds to that individual or company.
The payee is the only person authorized to withdraw or transfer the money to his/her bank account. It is also possible that you jot down ‘cash’ instead of the name of the person or company. This can be quite risky because in this case, anybody can withdraw the funds.
3. Numeric amount or money box
This is a little box which is one of the important parts of a personal check where you write down in numerical figures the amount of money that you wish to send. FYI, in the event of a disparity between the amount in words and the amount in numerical figures, the amount in words is the official one.
4. Transaction amount
On this line is where you write in words the amount you wish to send. Always write in a clear and exact transaction amount.
5. Memo line
The memo line is the least important area that you can find in the parts of a personal check. The memo line is the chance for you to write special notes regarding the transaction that can be helpful to the receiving party. But, it is not necessary, in short, you can leave the memo line empty.
If you issue a personal check, you need to write the present date. This part is very important because if you write the wrong date, your check can be voided by the bank. It is also possible to issue a post-dated check. This practice is done so the recipient can wait until you have funded your checking account.
7. Signature line
In order for the personal check to be valid, you have to affix your signature on the designated parts of a personal check. If there is an attempted fraud, the only way to check is by comparing your signature with the signature card.
8. Bank contact information
Each check has a section of your bank’s logo. Depends on the bank, sometimes the address and the contact numbers are also written on one of these parts of a check labeled.
9. Routing number
Parts of a check labeled as the routing number is a nine-digit code that changes depending on the location and the state of your bank. The routing number functions as an account address. In this way, the bank where the check will be deposited knows where the account is.
10. Personal account number
One of the parts of a personal check is your account number. This is the number that you would want to remain as secret or private as possible. This is because your account can be easily accessed through your personal account number.
You will find three sets of numbers at the bottom half of your personal check. To make it easier for you to determine which is the parts of a check labeled as your personal account number, it is the middle one. The on the left is the routing number while the one on the right side of your personal checking account is the check number.
But, not all parts of a check labeled are the same. You may come across a check with a different presentation. If you want to know the account number, all the time, it is the one before the highlighted symbol as illustrated in the above picture.
11. Check number
These are numbers that allow you to keep track of the number of checks you have already issued. Parts of a check labeled as a checking number helps you balance your checkbook. It can appear in two areas-on the top right and on the right bottom parts of a personal check.
12. 12-Bank fractional number or ABA
The American Banker’s Association or ABA number is found on the upper corner parts of a personal check. What this number represents is the location of your bank and the Federal Reserve branch serving the bank.
What Are The Parts of A Business Check?
A business check is almost the same as a personal check. Both checks will allow you to transact bank activities like deposits, fund transfers or payments, and withdrawals. That said, the physical appearance or the parts of a business check and a personal check is almost the same.
It is just that the business checks are used primarily by companies to buy goods for their business operations. These business checks are tied up to a business checking account of a particular bank. Business bank accounts have higher fees but these have more benefits like interest on daily balances and bonuses for being able to maintain the minimum business checking account balance.
What AreThe Back Parts of A Check?
You should not neglect the back part of a check. It is where you affix your signature to endorse the check and convert it into cold cash.
A lot of banks refuse to accept both personal and business checks if there is no endorsement signature.
You will find three parts of a check at the back. The endorsement part which we have already discussed. Then, the security screen and the security box.
To cap off…
As you have seen, checks have many parts. But, by understanding the parts of a business check and the parts of a personal check, you can avoid mistakes that could possibly result to void (comes with a charge) and in fraudulent bank transactions.