Having a cheque account can be very useful, but it's important that you're able to keep track of your finances and keep your cheque book balanced so as to avoid overdraft charges and returned cheques. Below you'll find some basic information about cheque accounts and how to manage them so as to help you decide whether or not opening up a cheque account is right for you at the current time.

Should you already have an account, then you might find some helpful suggestions that will assist you in keeping your cheque book balanced and your finances in check.

How Cheque Works

Before you open up a cheque account, you should have a firm grasp on how the process of cheques writing and deduction works. When you write a cheque, the actual paper cheque serves as a legal contract authorizing the recipient to deduct the specified amount from your chequeing account. They will deposit the cheque in their own bank account or take it to the teller to have it cashed, at which point the bank which deals with the cheque will complete the funds transfer.

In the past there has been a 3 to 5 day "float" period in most cases, where there were several days between when the cheque was written and when the funds were drawn from your account; with the advent of modern electronic cheque processing, however, the float period has all but disappeared in many places.

Electronic Cheques

Many modern cheques are processed electronically, and in some cases they are even returned to you after they have been scanned and processed at the register of some retailers. This electronic processing works in much the same way as cheques that are presented over the internet; the routing number and account number printed at the bottom of the cheque are sent to a processing center along with the cheque number, and the value of the cheque is then deducted from your cheque account. The electronic process works much like a debit card, and in many cases uses the same processor that debit and credit cards would use.

Balancing Your Cheque Book

Whether your cheques are processed electronically or traditionally, it's important that you keep thorough records of all of your transactions in your cheque book. Deduct all cheques and debit card transactions from the balance in your ledger as soon as possible after they're made, and compare your ledger to your monthly cheque account statement in order to make sure that everything is correct. This can help you to avoid overdrafts while also keeping your ledger balance up-to-date.

Deciding if a Cheque Account is Right for You

Having a cheque account isn't right for everyone; if you think that you might not be able to keep up with your cheque book ledger or that you might end up writing cheques for more than you have in your account, you might want to look at alternatives. Overdraft and bad cheques can lead to credit problems, increased debt, and in some cases even legal problems as the writing of cheques that don't have the funds in the account to cover them is considered to be a form of fraud or theft in most areas and is prosecutable as such.