Checks And Balances
Below is a MRR and PLR article in category Finance -> subcategory Personal Finance.
Understanding Checks and Balances
Summary:
Checks facilitate the transfer of funds from the account of the check holder in a bank or other financial institution, simplifying transactions much like cash.
When using checks, it's important to take several precautions to avoid future issues. Use a proper pen, ideally an ink pen, and ensure all information is accurately filled out. The numerical and written amounts must match. If you cancel a check, keep a record of it to help with account reconciliation. Sign legibly to prevent forgery and draw a line through any blank spaces after writing the amount to prevent alterations.
Banks have rules to protect against fraud. At times, you may need to provide a thumbprint to cash a check at a different bank from where your account is held. Identification methods are at the bank's discretion, typically involving an ID. Banks can refuse checks, even government-issued ones, to mitigate risk. They aren’t required to cash checks over six months old, except for certified ones.
For bad checks, state laws impose criminal penalties. A bad check occurs when payment is refused upon presentation due to the issuer's knowledge. Penalties range from misdemeanors to Class D felonies based on the check amount. Customers can stop payment by notifying the bank clearly, with a written confirmation following an oral request within 15 days. The stop payment order is effective for six months.
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