Banking: Check-Writing 101

The ability to write checks from your checking account allows you to pay bills or send money to service providers or relatives more securely than using cash – and less expensively and more conveniently than using a cashier's check or wire transfer service. You may be more familiar with online bill pay, where your bank allows you to simply enter the address of the company you want to pay, your account number and the amount to be paid, then the bank handles the transaction for you. You might also regularly use services like Venmo, PopMoney and PayPal that let you transfer money to friends online.

Many younger people have never written a check since these services have been around for as long as they’ve been banking. But there are still some situations where you need to write a check – for example, when there’s a contractor at your house who wants to be paid before leaving the premises, but who doesn’t accept credit cards. In this section, we'll teach you how to make a payment the old-fashioned way: through writing a check by hand.

What Goes on a Check?

First, you should understand the different parts of a check. Along the check's bottom edge will be a long series of numbers. The first series, on the left, is the routing number. This nine-digit number identifies your bank; financial institutions use it to process checks. Routing numbers, more formally called routing transit numbers, are sometimes also called ABA numbers or ABA transit numbers (ABA stands for American Bankers Association). All of these terms mean the same thing.

Next to the routing number will be your account number. With the routing number and your account number, the bank that accepts your check for deposit will know which bank to get the money from (using the routing number) and specifically, which account within that bank the money should come from (using your account number).

To the right of your account number will be the check number. This same number also appears at the top of your check in the right corner. The check number is a recordkeeping device that helps you and your bank keep track of the checks you've written. If you ever need to locate information about a check after you've written it, instead of searching for a dollar amount, a date and a payee, you can simply use the check number. Check numbers will never repeat within the same account.

Finally, the reason the routing number, account number and check number at the bottom of your check are in that funny-looking type is so they can be easily read by machines that process checks.

How to Write a Check

Writing a check is simple once you know what you're doing, but it can be confusing when you haven't done it before. What goes in all those blank spots? Read on to see what you put in each one:

On the top right side, there's a short line where you'll fill in the date. In the past, people used to post-date their checks so that they couldn't be cashed right away. For example, if someone needed to send a check to pay the water bill on the March 13 – but knew they weren't getting paid until March 15 – they might write March 16 on the check even though the actual date was March 13. Today, that strategy is useless because of Check 21 (we'll discuss this more in a minute), so go ahead and put today's date on the check.

In the middle of the check are two long lines. The first one says in small print to the left the line, "Pay to the order of." Here you simply write the name of the person or company you want to give money to. It's important to use the person or business's formal name so that the check will be accepted (so don't write any checks to "Mom"). You can even write checks to yourself, which you might do if you wanted to transfer money between accounts that you own and you couldn’t complete the transfer online. If you're not sure what name to write on the line, ask the business, "Who should I make my check out to?"

In the box to the right of this line, you write, in numbers, the amount that the check is for – say, $67.50. Easy, right? Then comes the part that might be the most confusing for beginners. This is the line underneath "Pay to the order of" where you write out, in words, the dollar amount of the check. Using a check for $65.70 as an example, you could write, "Sixty-five and 70/100" or "Sixty-five dollars and 70 cents" or "Sixty-five dollars and 70/100" or “Sixty-five dollars and seventy cents.” It doesn't really matter which of these methods you use: As long as the dollar amount you write in the box is the same as the dollar amount you write out on the line, the check will go through.

At the bottom left of the check is a blank line that says "memo" next to it. Filling out this line is optional. Most people use it for one of two things: 1) when paying a bill, they write their account number on this line so that, say, the phone company knows which account it's for, or 2) they write what the check is for so that when they look at the canceled check later, they'll remember what the check was for. The memo line can be especially handy if you’re paying someone you don’t pay regularly whose name you might not recognize later. Or you can write "charitable," to remind yourself that it's a deduction for tax purposes.

And here's what it looks like filled out:

Last, make sure to sign the check. Without a signature, your check will not be accepted. The signature line is the bottom right line on the check. (For more, see How to Write a Check.)

The final thing you need to know about writing a check is that, until it is deposited, your bank will have no record of that money being scheduled to leave your account (unlike online bill pay). That means you will need to make sure your account balance is more than sufficient to cover the check amount until the recipient deposits it. Before electronic banking become ubiquitous, people kept track of these transactions by balancing their checkbooks, which we discuss in section 7, “Managing Your Checking Account.”

Once a written check has been deposited, it becomes a canceled check. In the past, banks would return canceled checks to their customers, but nowadays it's more common to get an electronic printout of your canceled checks with your bank statement – or to view and print your canceled checks through online or mobile banking.

Check 21: Clearing for the 21^st Century Act 

The Clearing for the 21st Century Act (Check 21) is a federal law that was enacted in 2004. It allows checks to be processed without physically transporting a paper check from one place to another. Instead, an electronic image of the check can be used. This technology makes it less expensive for banks and other companies to process checks and also means that checks are cashed faster.

The delay that used to exist between the time you wrote your check and the time it was actually cashed was called a "float." Today, the only lag time between when you write a check and when it gets deposited is the amount of time it takes any check you mail to get through the postal system and be dealt with by the recipient or the amount of time it takes the recipient to actually submit the check to their bank. There may also be a slightly delay while the bank processes it after deposit.

But given that recipients can deposit a check the instant they receive it using mobile check deposit, the best way to avoid any problems with float time is to not write a check unless you actually have the money in your account. Often, any fee you would incur for paying a bill late will be lower than the overdraft fees you'll incur if you write a check that is larger than your account balance.

To use your checking account on an ongoing basis, you'll have to put money in to replace the money you take out. We'll teach you how in the following section.