Personal checks have always been one of the most popular forms of payment whether as third party
payments or for transactions involving point-of-sales. They are convenient, easy to use and
producing one is quick and fast. However, with changes and improvements in technology, this
method of paying is slowly becoming unpopular. Find out why.
What is a Check Anyway?
Generally speaking, a check is a depositor's written order to his or her bank, directing it to make
funds available to a person or entity who is either specified on the check or who physically bears it. A
check is basically an order from a bank to pay a certain amount of money to a specified person or
It is considered a negotiable instrument in that it can be used to pay an individual, a group or a legal
entity. Only a depositor with a checking account may use checks as a means to purchase goods or
services. It is variously spelled as check, cheque or checque. The U.S. uses 'check' while
Commonwealth countries and Britain uses 'cheque'.
A personal check is check drawn from the personal funds of a depositor or account holder. Each
time an account holder writes a personal check, he guarantees that he has sufficient funds in his
bank in order to pay the amount specified on his check. If the payee withdraws the amount from the
drawee bank or deposits it in his own account and the depositor's funds are insufficient, his check
will bounce and he will be subject to certain penalties and fees, depending on his drawee bank.
An advantage of personal checks or any type of check for that matter is that they are convenient to
use and protected the bearer against theft. They also function as receipts after they have been
processed by the drawee banks and returned to the depositor or drawer.
What's in a Personal Check?
Typically, a personal check will contain certain information such as: account number, check number,
place of issue, date of issue, payee, amount of currency (in words and figures) and also the signature
of the drawer.
The Parties Involved
The drawer or maker is the depositor or person who is writing the check. The payee is the person or
entity tos which the amount of money specified on the personal check is to be paid. The drawee is
the financial institution or bank where the check can be handed over for payment.
The Disadvantage of Personal Checks
Unlike other types of checks, a personal check is more often discouraged not only by legal entities
but even by individual payees. Other kinds of checks have an unquestioned validity and are more
preferred since the funds backing these checks are more likely sufficient.
What the Future Holds for Personal Checks
Personal checks as instruments of exchange are gradually losing their popularity as a means with
which to pay for goods and services. The decline is merely a result of better and more convenient
alternative means, such as debit or credit card payments, online and telephone payments and
banking. ATMs are also the more preferred method of getting cash. Unlike checks, machines are
more available and accessible regardless of day and time.
Another reason is that checks are simply costly to process for financial institutions and banks, since
they entail transactions to be done with paper. Compared to other methods of payment or
transactions such as electronic payments, checks are slower to process and use more resources
(paper, ink, manpower).
Personal checks are also more likely to be used in fraud and even identity theft, since they often
include personal information such as the depositor's name, account number and signature. In some
countries, personal checks even include the account holder's address.
The United States is one of the countries that still rely on checks and checking accounts, although this
practice is changing. Even transactions using checks are processed electronically between banks.