22 Tips for New Checking Account Owners

Here are 22 of the most helpful tips for first-time owners of checking accounts:

1.  Avoid issuing your check to CASH. Anyone can encash it.
      If lost or misplaced, any person who finds your check can encash it.

2.  When writing your payee’s name and check amount, always start writing:
     immediately after PAY TO THE ORDER OF
     immediately after the peso sign
     and immediately after PESOS
     Why? So that no one will be able to insert additional numbers or words to increase your check amount.

      Another option is to put  ** immediately before and after the amount in digits and amount in words, and to write ONLY after the amount in words.

3.  Be careful about writing dates.

          There’s no April 31, for example. It’s past New Year’s Day, remember to write the new year.    

          Errors like these are usually caught by the bank teller, but if not, the check can go through clearing until the error is caught by the payor bank. Your payee can charge you for time wasted, or business opportunity lost due to a date error.
          Some banks also impose a service fee for a check processed with check errors.

4.  Fund every check you have issued before the check date.

     If unexpected money problems arise, call your payee and try to ask to delay cheque encashment for a few days. However, this is not always successful, so have backups.

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5.  Be careful about issuing post-dated checks (PDCs). Ask yourself if you will be able to fund every check before due date.
     Many companies warehouse their checks (they give all the checks to their banks for deposit on check dates), so expect all your cheques to be deposited on check dates.
If your cheque date falls on a Saturday, Sunday or holiday, the bank will deposit your cheque on the business day immediately before check date.

6.  Be aware of penalties that you will pay if you cannot fund your check on time.  Penalty amounts vary among banks, but these are the common amounts:

       Penalty for a Returned or Bounced Check: 2,000 pesos
       Additional Penalty for a Returned Check:  200 pesos for each day that passes until you fund your check
       Application for Stop Payment Order:  200 pesos
       Stop Payment Order Penalty, whether funded or unfunded: 2,000 pesos
     
       200-Peso-Per-Day Penalty Increases if Check Amount is More than 40,000 Pesos (200 pesos for every 40,000 or a fraction of 40,000)

7.  Know that there are laws against bouncing checks.

You can be imprisoned and/or fined for issuing a returned or bounced check, if your payee sues you under the Anti-Bouncing Checks Law (BP 22 or Batas Pambansa Bilang 22) and you are found guilty.
       Another law that can be used against you is the law on Estafa or Swindling (Presidential Decree No. 818, an amendment to Article 315 of the Revised Penal Code, increasing the penalties for Estafa committed by means of bouncing checks).

8.  Know the meanings of these acronyms: DAIF and DAUD
     
       DAIF = Drawn Against Insufficient Funds
       DAUD = Drawn Against Uncleared Deposits
                     
       DAIF means your account balance is not enough to pay your check payee.
       DAUD means your account balance is enough, but part or all of the amount is not yet available due to not-yet-cleared check or checks.

       Both DAIF and DAUD checks are considered Returned or Bounced Checks. You will pay the penalties.

       In case you are sued for bouncing check, DAUD puts you in a better position to defend yourself.

9.  If a check you issued is due on a Saturday, Sunday or a holiday, fund it the preceding Friday, or the day before the holiday.
This is important specially if you issued your check to a company. Many companies have their checks warehoused in their banks, and these banks usually deposit these cheques on the day immediately before the due date that falls on a Saturday, Sunday or holiday.

10.  Maintain your checking account.

      You have a Monthly Average Daily Balance (MADB) requirement, usually 5,000 or 10,000 pesos.
      If your account falls below the required MADB for 2 consecutive months, you will be charged 300 to 500 pesos every month from month to month until you restore your account to MADB level, or until your account balance becomes zero or negative, and your account is automatically closed.

11.  If you use a check to pay your credit card bill, pay at least 3 days before your credit card due date. This is to give time for clearing. Do this for all creditors that impose fees on late payments.

12.  Always fill up the balance form of your checkbook so you can monitor the money flowing in and out of your account.

13.  Avoid bringing your checkbook when going out. Keep it in a secure place in your house.
     Plan your check issuance so there will be no need to bring your checkbook when you go out.

14.  Avoid letting other people know that you have a checking account.
       Someone might borrow a check from you and make promises to fund it, but later on, on due date, will not be able to fund your check, and it will be you who will suffer the consequences.

15.  Use a pen, preferably black or blue, that does not smudge or blot.

16.  Never sign a blank check.
       Write first the Payee, Date and Amount before signing.

17.  Be sure about your payee’s name.
        If your payee is a company or institution, ask for the correct name of the company or institution.
     
18.  What is a Crossed Check?

        A Crossed Check has 2 diagonal lines on its top left portion.
        Some printed checks also have the words FOR PAYEE’S ACCOUNT ONLY.
        A Crossed Check cannot be encashed over the counter. It can only be deposited to the payee’s account.
     
19.  Make sure your check has no erasure, no alteration, no countersign or no missing information.
       Banks and the Philippine Clearing House Corp. (PCHC) will no longer accept checks with errors.

20.  Your date should be complete. Write the day, month and year.
        Acceptable format examples are:
          December 18, 2015
          Dec 18, 2015
          12/18/2015
          18 Dec 2015
          18-Dec-2015

21.  Your signature on your check should match your signature in your bank file.

22.  Starting March 2016, the PCHC will no longer return to you the physical copy of the check that you have issued. The PCHC will launch its Check Image Clearing System.

Update as of March 15, 2018: Many banks are already using the Check Image Clearing System, but checks are still being cleared after 3 days.

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