Even in today’s age of UPI and online transactions, cheques hold significant importance for large payments and as proof of transactions. Cheques are issued to both savings and current account holders by banks, and they come in various types. Each type of cheque is designed for specific purposes, making it essential to understand their differences and uses.
Here is a detailed breakdown of the 9 types of bank cheques and where they are used:
1. Bearer Cheque
A bearer cheque is payable to the person presenting it at the bank. It can be encashed by anyone holding the cheque without any formal identification or verification. These are generally used for cash withdrawals but carry higher risks if lost or stolen.
- Use Case: Quick cash withdrawals or payments to individuals without requiring identification.
2. Order Cheque
An order cheque includes the payee’s name followed by the phrase “or order.” This ensures that only the named person or an authorized individual can cash the cheque.
- Use Case: Payments requiring added security, ensuring only authorized individuals can access the funds.
3. Crossed Cheque
Crossed cheques have two parallel lines drawn across the top left corner, often with the words “A/C Payee” written between them. These cheques can only be deposited into the bank account of the payee mentioned, reducing the risk of misuse.
- Use Case: Secure payments directly to a payee’s bank account.
4. Open Cheque
An open cheque, also known as an uncrossed cheque, can be encashed by the bearer at the issuing bank’s branch. These cheques are less secure as anyone holding them can claim the funds.
- Use Case: Immediate cash payments when security is not a primary concern.
5. Post-Dated Cheque (PDC)
A post-dated cheque is issued with a future date written on it. The bank will not process the cheque until the specified date, making it useful for planned payments.
- Use Case: Rent payments, EMI transactions, or other scheduled financial commitments.
6. Stale Cheque
A cheque becomes stale if it is presented for payment after its validity period has expired. Currently, most cheques are valid for three months from the date of issuance.
- Use Case: Not applicable, as stale cheques are considered invalid for transactions.
7. Traveller’s Cheque
Traveller’s cheques are prepaid instruments issued by banks that act as a universal currency. They do not have an expiry date and can be used for payments or exchanged for local currency when traveling internationally.
- Use Case: Secure payments during foreign travel, as they can be easily replaced if lost.
8. Self-Cheque
A self-cheque is issued when the account holder wants to withdraw cash for personal use. The word “Self” is written in the payee column.
- Use Case: Cash withdrawal for personal use by the account holder.
9. Banker’s Cheque
A banker’s cheque is issued by a bank on behalf of the account holder for making payments within the same city. It is considered more secure than personal cheques as the funds are already debited from the account at the time of issuance.
- Use Case: Payments requiring high trust, such as property purchases or large transactions.
Why Cheques Still Matter
Despite the rise of digital payment systems, cheques remain a trusted method for many transactions. They offer tangible proof of payment and are widely accepted for high-value and formal transactions. Understanding the various types of cheques can help you choose the right one for your specific needs, ensuring both convenience and security.
