Most of us still use cheques, although most financial institutions probably wish that credit cards, cash cards, and other forms of electronic funds transfer were more popular.
Moving money around by computer is so much easier and cheaper than the current system of moving a piece of paper -your cheque- from one place to another.
There are security risks in both systems, and this DataSheet looks at how safe your money is within the Cheques system.
We described the method of handling cheques in DataSheet 11 (Cheque Clearance); but in the space available we could only describe the rather complicated route which your cheque follows from someone else's bank back to your own to allow a payment to take place.
This DataSheet looks at some of the risks involved in using the cheque system. As always, the only person looking after your interests is YOU.
To make sure that your money is not enjoyed by someone else, you must cheque your bank statements regularly.
Make sure that you know exactly what each entry means, and that you agree that all entries are correct.
Some 4 Million cheques per day go through a complicated process of being paid into a bank, 'cleared' through various regional centres, and then being passed back a regional centre of the bank which issued the original cheque book.
During that process the account details are read automatically from the details on the bottom of the cheque.
At some time however, the details of how much is being paid, and to whom, have to be added to the computer record.
Dates, Crossings, and Signatures
Everyone assumes that a cheque cannot be cashed unless it is dated correctly - some companies still ask for 'post dated' cheques so that payments can be processed through the year.
While you would have a legal right to have any payments refunded if someone presented a cheque which was dated for next month or next year, the chances are that the payment would still be made.
An operator processing hundreds of cheques per hour would have to notice the unusual date error and reject the cheque to prevent your account being debited.
Once the (so far as you are concerned) unexpected payment had been made, you would have to sort out the ensuing problems if Direct Debits or other cheques were rejected because of the incorrect payment.
Our recommendation -
Do not give out post dated cheques for any reason; and make sure that all the cheques you have issued are presented to your bank on the correct date and for the right amount.
Look at your cheque book and your bank statements and mark off the cheque numbers in the statement.
Crossed Cheques
Everyone also assumes that a crossed cheque cannot be paid in any other way than into a bank account with the same name as that on the cheque.
There are agreements between banks and some companies which allow cheques to be paid into the 'wrong' account if presented by the company.
Again the agreement requires that an incorrect payment will be refunded - when and if the mistake is noticed.
If you send a cheque as a present, make sure that you warn the person to expect the letter. If you want to give someone £20 and you put the cash in their hand, you know the payment has gone to the right person. If you use any other method which means that you do not personally see the intended person receive the cash, it only makes sense to check for yourself to make sure that your payments get through.
|
|
|