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I live in continental Europe, can someone please explain the American cheque system to me? Is it still widely used? We have giro and SEPA transfers. If I want

I live in continental Europe, can someone please explain the American cheque system to me? Is it still widely used? We have giro and SEPA transfers. If I want to transfer money to someone, I simply order my bank to withdraw said amount from my account and transfer it to the destination account. I could even do this without having a banking account. Anybody could walk to a post office or bank and pay into someone's bank account with cash on hand.

rbanffy 14y ago
In a lot of places, a check is just a payment order written on a standardized and somewhat convenient piece of paper. At least in Brazil, if I write the same text that's on a check and sign it, you can take that piece of paper to my bank and demand the money. That said, it's been so long since I last used my checkbook, the bank changed its name and my account number since it was printed. And yes, they are still valid.
melvinmt 14y ago
Wire transfer is the same as giro, except a single wire can cost you around $18 to send AND receive money while checks are always free (by law I guess).
smackfu 14y ago
It's much less widely used than it once was, especially among younger folk. The only checks I write are to settle up personal debts between trusted folks, and that happens maybe once every 6 months and only if they don't have Paypal. Everything else is done via direct bank transfer or electronic bill payment.
ahi 14y ago
Checks are widely used for rent, payroll when direct deposit is not setup, and by the old person in front of you at the grocery store checkout when you're in a rush. In the US, checks are basically a paper method to "order my bank to withdraw said amount from my account and transfer it to the destination account." The laws regarding what makes a valid check are (or at least were) rather loose. Someone once paid his taxes by writing a check on the side of a pig and delivering it to the IRS.
peckrob 14y ago
American here. Checks are basically little pieces of paper (about the size of two credit cards; they usually come in a book of 25-50) that allow the recipient to make a demand against my account. I write on the check the name of the recipient, the date, the amount (in two places, one in long form and one in numeric form) and sign the bottom. They have a set amount of time in which they can deposit the check (I think it's somewhere between 30 and 90 days, but I can't remember). The recipient endorses it on the back by signing it and deposits it at their bank, and their bank handles transferring the money between the banks and into the appropriate accounts. Printed on the bottom of the check is my account number and a routing number for my bank. They're printed in a format called MICR, which uses magnetic ink (or used to, not sure if they still do) so that computers can scan them quickly. When I worked at a grocery store in the 90s, our systems were supposed to actually verify whether or not a check was "good" by checking the amount against the amount available in their accounts. Not sure if this really worked, because I never saw a check get rejected. It used to take several days for the whole thing to play out. What would happen is that, when the recipient deposited one of my checks, their bank would credit them the amount of the check immediately (there are some limitations on this depending on the size of the check; banks have various policies about that) and the check would enter the inter-bank system. A day or so later, the actual amount would be withdrawn from my account. In most places, passing a bad check (called "bouncing") is a crime, though most banks will provide some type of overdraft protection (usually with an accompanying steep fee) to keep you from getting in trouble with the law. Checks were widely used up until the early-mid 2000s, when debit cards started to become widespread. These days, they are primarily used by the elderly who refuse to adopt newer technology, in businesses that do not use direct deposit, and in complex financial situations (such as purchasing real estate). Other than that, the vast majority of purchases in America happen via the card networks. I write maybe three checks a year and receive maybe two. Everything else is done online or by the card networks. And best of all, when I receive a check, my bank (USAA) lets me just take a picture of it with my iPhone and immediately credits me the amount, as a scan is considered a valid reproduction of the check.

rbanffy 14y ago

In a lot of places, a check is just a payment order written on a standardized and somewhat convenient piece of paper. At least in Brazil, if I write the same text that's on a check and sign it, you can take that piece of paper to my bank and demand the money. That said, it's been so long since I last used my checkbook, the bank changed its name and my account number since it was printed. And yes, they are still valid.

melvinmt 14y ago

Wire transfer is the same as giro, except a single wire can cost you around $18 to send AND receive money while checks are always free (by law I guess).

smackfu 14y ago

It's much less widely used than it once was, especially among younger folk. The only checks I write are to settle up personal debts between trusted folks, and that happens maybe once every 6 months and only if they don't have Paypal. Everything else is done via direct bank transfer or electronic bill payment.

ahi 14y ago

Checks are widely used for rent, payroll when direct deposit is not setup, and by the old person in front of you at the grocery store checkout when you're in a rush. In the US, checks are basically a paper method to "order my bank to withdraw said amount from my account and transfer it to the destination account." The laws regarding what makes a valid check are (or at least were) rather loose. Someone once paid his taxes by writing a check on the side of a pig and delivering it to the IRS.

peckrob 14y ago

American here. Checks are basically little pieces of paper (about the size of two credit cards; they usually come in a book of 25-50) that allow the recipient to make a demand against my account. I write on the check the name of the recipient, the date, the amount (in two places, one in long form and one in numeric form) and sign the bottom. They have a set amount of time in which they can deposit the check (I think it's somewhere between 30 and 90 days, but I can't remember). The recipient endorses it on the back by signing it and deposits it at their bank, and their bank handles transferring the money between the banks and into the appropriate accounts. Printed on the bottom of the check is my account number and a routing number for my bank. They're printed in a format called MICR, which uses magnetic ink (or used to, not sure if they still do) so that computers can scan them quickly. When I worked at a grocery store in the 90s, our systems were supposed to actually verify whether or not a check was "good" by checking the amount against the amount available in their accounts. Not sure if this really worked, because I never saw a check get rejected. It used to take several days for the whole thing to play out. What would happen is that, when the recipient deposited one of my checks, their bank would credit them the amount of the check immediately (there are some limitations on this depending on the size of the check; banks have various policies about that) and the check would enter the inter-bank system. A day or so later, the actual amount would be withdrawn from my account. In most places, passing a bad check (called "bouncing") is a crime, though most banks will provide some type of overdraft protection (usually with an accompanying steep fee) to keep you from getting in trouble with the law. Checks were widely used up until the early-mid 2000s, when debit cards started to become widespread. These days, they are primarily used by the elderly who refuse to adopt newer technology, in businesses that do not use direct deposit, and in complex financial situations (such as purchasing real estate). Other than that, the vast majority of purchases in America happen via the card networks. I write maybe three checks a year and receive maybe two. Everything else is done online or by the card networks. And best of all, when I receive a check, my bank (USAA) lets me just take a picture of it with my iPhone and immediately credits me the amount, as a scan is considered a valid reproduction of the check.