Types of Cheques
1. Bearer Cheque: This cheque is payable to the bearer and is cashable at any time upon presentation. It is important to note here that it must be signed. Bearer cheques are very risky and in case, such cheques are misplaced it can lead to a loss of the amount mentioned in the cheque.
2. Order Cheque: Payable to a designated individual or organization and can be withdrawn exclusively by that individual only. In this kind of cheque, the words ‘or bearer’ is canceled. Such cheques can only be issued to those persons whose name is mentioned on the cheque and the bank does the background check to authenticate the cheque’s bearer identity before releasing the payment.
3. Crossed Cheque: A Crossed Cheque has two parallel lines on it, meaning it cannot be cashed over the counter but only deposited into a bank account. Only the person whose name is written on it can get the amount transferred to his account. The crossed lines ensure that irrespective of who presents the cheque, the payment will be made only to that individual whose name is written on the cheque.
4. Open Cheque: These are not crossed or marked, and are payable to the bearer or a designated individual over the counter. An open cheque can be encashed at any bank, and the payment can be made to the person bearing the cheque. Here, the issuer needs to put his signature on both the front and back sides of the cheque.
5. Post-Dated Cheque: It is a cheque that is dated for a later time and is payable on or before that date. Post-dated cheques bear a later date of being encashed. The bank will process the amount for payment on the date mentioned in the cheque.
6. Stale Cheque: A cheque that hasn’t been paid for a predetermined amount of time, often six months, after it was issued, is a Stale Cheque. In other words, a Stale Cheque is a cheque that was written too long ago and that a bank may refuse to pay when someone tries to get the stated amount.
7. Traveler’s Cheque: This type of cheque can be used for withdrawing money while traveling. It is equivalent to carrying cash but one can travel safely without carrying heavy cash. They can be encashed abroad where foreign currencies are acceptable.