Whenever you get a cheque from someone, you obviously require cashing it. You can simply do it using your bank account. In case you do not have a bank account, you can use check-cashing service provided by several banks. However, you must open a bank account at the earliest. Depending on the kind of account you possess, you must know how to bank a cheque, which normally does not cost any money. You can cash your cheque at your local branch of the bank or at the ATM.
How to bank a cheque
When you need to bank your cheque, you need the following things:
- Your identity proof
- Bank card
Most financial institutions and banks have a holding period of 5 days before the amount of your cheque is given to you. When you deposit the cheque in your bank, the cheque is returned to the bank of cheque- writing person. After that, when the cheque is cleared, or the account of that person contains the required amount, the bank releases money to your bank, and your bank transfers the money to your bank account. In case, the account of that person does not contain sufficient funds, the bank of the cheque- writing person does not release money and the cheque will be sent back to your bank. All this process normally takes 4-5 days.
However, you can cut short this holding period. If the staff of your bank knows and trusts you, you will get your money from the bank earlier. It is mandatory for all banks to cash a cheque of government of Canada, even if the cheque- bearing person does not hold a bank account. This includes rebates of HST/ GST and refunds of income tax.
You are also required to carry your valid ID proof with your signature and photo to the bank while you deposit your cheque. You can check if your region issues an ID card with photo for non- driving persons. If you have an ID that does not consist of both signature and photo, you will need to show two ID proofs.
Cash advance outlets
You can also ask your cash advance outlets to bank your cheque. Such stores cash the cheque instantly if you show them proper ID proof. They charge a fee for this service, which is usually 3% of the entire amount of cheque. These stores also charge $3 for each cheque. For instance, you may have to pay $18 for cashing a cheque of $500. This may not appear much of an amount, but you may end up paying significant money if you receive cheque frequently.
Formalities while cashing a cheque
You have to sign the cheque before cashing it, but you must not sign it before cashing it. This is because a cheque is equivalent to cash once you sign it and in case it is stolen or lost, anybody can cash it. You must use same signature in your bank every time.
When you write a cheque to yourself for cashing, do not keep it as ‘cash’ payment, which means anyone can cash it. Instead, you must make the cheque payable to you only. You can do it by writing your own name in the ‘payable to’ space.