A personal check is a type of check intended for your personal use. It’s a slip of paper that tells your bank to transfer funds out of your own checking account and into a payee’s account. It’s obvious that if you’re the payer, the personal check will transfer cash from another account to your own account.
When should you make use of personal checks?
Personal checks typically come in handy when the person who is paying you wants to be paid by check. Small businesses aren’t able to accept debit or credit cards. However, certain businesses won’t allow cash payment in the event that the amount exceeds an amount that is specified. This brings personal checks into the picture.
If you’re an entrepreneur with a limited business it is important to be aware that a personal check is not a secured check. This means that the payee is able to write your company a cheque for any amount. This means that they could not have enough funds in their personal bank accounts. Therefore, when you go to the ATM to cash the check, it could bounce. It also means that you will not be paid until the person who is paying you has enough cash in their banking account.
However, if you choose to pay a personal check with no funds in your bank account, then you may be charged an overdraft cost.
How to Avoid Bouncing Checks as a Business Owner
If you’re an owner of a company that accepts checks made on paper, you may run into trouble with customers who pay using personal checks. This happens if your customer hasn’t had enough cash in their checking account. Thus, it is recommended to ask customers for cashier’s checks that are certified instead of bounced checks to prevent them from happening. Let’s take a deeper examine what these types of checks are.
Cashier’s Checks
The check is a withdrawal of money from the funds of a financial institution for the beneficiary. It’s typically made by a bank employee. Furthermore, it assures anyone who is receiving the cashier’s check receives the entire amount due in sealed bank bags. In addition, once the check is drafted, the amount will be credited to the check writer’s bank account. The money is later transferred directly to the institution.
Certified Checks
Additionally, a certified check is like a cashier’s cheque. However, instead of obtaining money from the lender’s fund, the lender must confirm that the payee has sufficient funds in their savings or checking account. In addition, the bank will verify the signature of the account owner. They ensure that the business or person receiving the check is paid the full amount owed.
Additionally, both certified and cashier’s cheques are often used to make big purchases like cars and home improvements, as well as mortgage payments on properties.
Similarities Between Personal Checks and Business Checks
Personal Checks and business checks are distinct from each other, even though they are alike. But, they have a few things in common. First, you can deposit or cash a check regardless of whether it’s for business or personal.
A further commonality between business and personal checks is the fact that they include the same information. Alongside a routing code for the bank, the check also has an expiration date, payee information or check number, amount payable, and signature line.