Uses of Cheque & Passbook

Uses of Cheque A cheque or check (US spelling) is used as a method of payment instead of using cash or a credit or debit card. It is a piece of paper that contains information including your bank account number and sort code with the instructions for a certain amount of money to come out of your bank account to pay the named person or organisation named on the cheque. As the person writing the cheque does not have to produce any cash when paying by cheque, it is often a useful way of paying for goods by post or when you do not want to hand over a huge amount of cash. This is because the payee, the person or organization to which the money is being paid to, is the only person able to cash the cheque. In this case, even if the cheque does fall into the wrong hands, it cannot be cashed by them as they are not the payee named on the cheque. Cheques are like a type of bill of exchange and they were originally introduced to make it easier and safer to make payments without having to carry huge amounts of money around with you. In recent years this method of payment has become less popular as other electronic payment methods such as the use of debit and credit cards have become more prevalent. An advantage to the drawer of using cheques instead of debit card transactions, is that they know the drawer's bank will not release the money until several days later. Paying with a cheque and making a deposit before it clears the drawer's bank is called "kiting" or "floating" , but rarely enforced unless the drawer uses multiple chequing accounts with multiple institutions to increase the delay or to steal the funds. Uses of Passbook While a traditional passbook savings account offers low interest rates, you can often open an account with a minimum deposit of only $25. A passbook savings account is a liquid asset that offers individuals a convenient way to save. Still, you will want to compare the interest rates offered by competing financial institutions, in addition to A passbook or bankbook is a paper book used to record bank transactions on a deposit account. Depending on the country or the financial institution, it can be of the dimensions of achequebook or a passport. A passbook or bankbook is a paper book used to record bank transactions on a deposit account. Depending on the country or the financial institution, it can be of the dimensions of achequebook or a passport. Credits and deposits An account holder uses their passbook to record their history of transactions with their bank. To add credit to an account by bringing cash to a bank in person, the account holder can fill a small credit slip or deposit slip. The total amount of each note and coin is counted and entered on the slip, along with who it is paid in by and the date. The cash and details are counted and checked by the teller at the bank, if everything is in order the deposit is credited to the account, the credit slip is then kept by the bank and the credit slip booklet is stamped with the date and returned to the account holder. Debits and withdrawals Withdrawals normally required the account holder to visit the branch where the account was held, where a debit slip or withdrawal slip would be prepared and signed. If the account holder was not known to the teller, the signature on the slip and the authorities would be checked against the signature card at the branch, before money was paid out. In the 1960s, banks adopted the black light signature system for passbooks, which enabled withdrawals to be made from passbooks at a branch other than the one where an account was opened, unless prior arrangements were made to transfer the signature card to the other branch. Under this system, the passbook's owner would sign in the back of the passbook in an invisible ink and the signing authorities would also be noted. At the paying branch, the signature on the withdrawal slip would be checked against the signature in the book, which required a special ultraviolet reader to read.[1] Nowadays, customer verification is more likely to be by PIN. Direct banking For people who feel uneasy with telephone or online banking, the use of a passbook is an alternative to obtain, in real-time, the account activity without waiting for a bank statement. However, contrary to some bank statements, some passbooks offer fewer details, replacing easy-to-understand descriptions with short codes.