It can seem so simple sometimes, simply writing out a cheque in order to pay for your purchases. Have you ever stopped to wonder exactly how your chequeing account works, though?

After all, there's more to it than simply writing a cheque or swiping a cheque card a lot of things go on behind the scenes to make sure that the transaction is valid and that you have enough money in your account to cover the cheque that you're writing.

If you've ever wondered exactly how your cheques are validated and how chequeing accounts actually work, then you've come to the right place.

An Overview of Cheques

Before you can learn too much about how cheques work behind the scenes, it's important to make sure that you know the basics of your chequeing account.

A chequeing account is, obviously, a type of bank account that allows an individual to write cheques or to use a cheque card in place of the money that is held in the account. When a cheque is written or a cheque card is used, the amount of the transaction is deducted from the balance held in the chequeing account.

Traditionally, chequeing accounts have been viewed as more of a convenience account than savings accounts and therefore haven't been privy to the interest rates offered by savings (and usually even had additional fees associated with the account) since before the turn of the century, however, there has been a growing trend among banks to remove the fees (on at least some of the accounts) and even offer interest rates for chequeing customers.

Fees and fines do still exist, however especially if you overdraw the account meaning that you write cheques that the balance of the account can't cover.

Cheque Verification

In the modern electronic age, a variety of steps have been taken to avoid overdraft and bounced cheques which is the term for a cheque that is refused by the issuing bank due to insufficient funds.

The most prominent of these steps is the widespread use of cheque verification systems, which run a check to make sure that the chequeing account is valid and in many cases that the balance of the account is high enough to honor the cheque.

These systems use a cheque reader to get the account number and routing number off of the cheque electronically, and then send these numbers to the system's central computer so that it can check to see if there are any previous problems with that particular account.

With some systems, they will also contact the computer of the bank that hosts the chequeing account so as to verify that the account exists and transfer the funds electronically to cover the cheque.

There is a movement among businesses to make the electronic funds transfer the standard system used for cheque verification (since it greatly reduces the chances of a bounced cheque), though a variety of businesses worldwide still use more primitive cheque verification techniques when they use any at all.

Keeping Your Chequebook Balanced

Of course, one of the best ways to avoid bouncing a cheque is to make sure that all of your money and expenses have been properly accounted for.

At least once per month (though many would recommend that you do it more frequently) you should sit down with all of your expenses and cancelled cheques to make sure that everything has been properly accounted for.

This allows you to keep a tighter watch on your expenses while helping you to save money in bounced cheque fees.

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