Hello, today I'm going to start a new series called My Opinion. I'll jump in between series from now on so don't be concerned if you thought the other series ended.
What are Cheques?
Cheques are basically fancy pieces of paper saying that you'll promise to pay the person or business named on a specific date for a specific amount. The string of numbers at the bottom tells the bank to withdraw the funds out of that account and place it in your account if you're making a deposit with a cheque. You can also use void cheques as an alternative to direct deposit forms. I wouldn't recommend this though because you usually have to pay a fee to order cheques for yourself.You, the average consumer probably won't ever need to write a cheque. You can perform most of your daily purchases with credit cards, debit cards, e-transfers and cash. Most cheques are used for larger transactions, usually for work done because the amount exceeds the limit for your debit/credit cards. Still, they are commonly used even among consumers for smaller private purchases or money transfers.
Some Rules to Remember:
- You can't deposit cheques past 6 months from the date it was written
- You can't deposit cheques before the date it was written
- You can't deposit cheques if there is missing information - signature, amount, name, date, etc.
- You can cash any Canadian government cheques as long as you have valid ID even past the 6 months from when it was written
- You cannot cash Canadian government cheques if:
- The amount is over $1,500
- Suspicion of fraud
- Signed/endorsed by a 3rd party (Giving your cheque to another person by signing it)
I Don't Like Them
Cheques are obsolete outside being used for larger transactions. Here are some reasons why I don't like cheques:- They take longer to receive in the mail compared to direct deposits
- Risk of not having enough funds from the cheque's owner
- They might be placed on hold until they are verified
- So much fraud
- You can lose your physical cheque
Cheques present more of a risk than they are useful. It puzzles me as to why we still use this outdated system. With our ever-changing technological world, I'm sure we would be able to develop a better system. Most cheques are usually placed on hold for about 5 business days before the funds are released. This hold helps the bank verify the cheque for fraud and if there are enough funds in the account to transfer over. Each person has their own individual hold code when they deposit a cheque. The maximum for individuals is $5,000.
Let me explain with the following scenario:
- Hold code - 2000
- Cheque to deposit - $5,000
In this case, the cheque deposit is $5,000 and the hold code is 2000. You may have access to a maximum of $2,000. The remaining $3,000 will be placed on hold until they are cleared. Alternatively, if your cheque deposit is under your hold code, the full amount MAY be released to you. It's important to understand that the cheque may still be held even though your cheque deposit is below your hold code. Your bank may also clear the full amount depending on their discretion.
You might say drafts are an alternative because they are essentially the cash amount in paper. Yes they are but they still have the risk of being lost or stolen as well as being placed on hold if they cannot be verified for sufficient funds or fraud. It still doesn't really solve anything.
If it were up to me, I'd like to implement a new system that would allow larger transfers in a shorter period of time. This would be similar to an e-transfer but with extra features. Instead of writing a cheque, you would contact your bank and verify yourself to transfer your funds to the other person's account. The transfer would be real-time or take a day at the most to process. This would eliminate the risks for physical cheques, the need for holds, the risk of having insufficient funds and fraud. Both the sender and receiver would receive a confirmation notification when the funds are successfully transferred.
Anyways, that's my take on the use of cheques!
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