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Information on Checks Also spelled cheque, a check is a bill of exchange that is drawn on a bank and payable on demand. Checks are the main method of payment in most developed countries. Because of this fact, the funds in checking accounts, or checkbook money, is considered as part of a nation’s money supply by economists. About 75 percent of the total amount of money in circulation in the United States of America is checkbook money. Checks may be transferred from one person or entity to another by endorsement and delivery, or by delivery alone. Although most consumers are not aware of this, a signature is not required on a check. A demand draft is a document that is imprinted with a consumer’s name, address, telephone number, account number, and bank routing number. This can be used for a one-time withdrawal from a checking account, with no prior authorization. The mortgage and insurance industries have used demand drafts for many years to offer credit card convenience for check writers. Typically, checks are paid by the debiting and crediting of bank deposits rather than by currency. The clearing of a check may be accomplished by direct presentation, by banks through local clearinghouses, or through central banks such as the United States Federal Reserve Banks. There are many reasons that checks are a preferred method of payment. Checks are convenient to carry, widely accepted as a form of payment, less subject to theft than cash, and after a check is processed and returned it serves as a receipt. Copyright© 2000 by Business Cashflow Solutions, Inc. All rights reserved. Sources: The New Encyclopedia Britannica, Encyclopedia Britannica, Inc, Chicago, IL, 1998 Academic American Encyclopedia, Grolier, Incorporated, Danbury, CT, 1993 The World Book Encyclopedia, World Book, Inc., Chicago, IL, 1998
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