Cheque Account

A cheque account is a bank or building society account on which cheques can be drawn. In the United States, this type of account is known as a checking account. It is designed to provide easy access to funds for everyday transactions.
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Definition

A cheque account, also known as a checking account in the United States, is a type of bank account that allows the account holder to make withdrawals and deposits. Money held in a cheque account can be accessed using cheques, electronic debit, ATM withdrawals, and other methods. These accounts are typically used for everyday transactions and are a core product offered by banks and financial institutions.

Examples

  1. Personal Cheque Account: Jane uses her cheque account to deposit her paycheck, pay bills, and make everyday purchases. She can write cheques, use a debit card, or use online banking to access her funds.

  2. Business Cheque Account: XYZ Corporation maintains a business cheque account to manage their day-to-day transactions, such as paying suppliers, processing payroll, and handling other operational expenses.

Frequently Asked Questions

What is the main difference between a cheque account and a savings account?

A cheque account is designed for frequent transactions and easy access to funds, whereas a savings account is intended for storing money and earning interest over time with limited access.

Can I earn interest on a cheque account?

Some cheque accounts offer interest, but the interest rates are typically lower than those offered by savings accounts.

Are there fees associated with cheque accounts?

Yes, banks may charge fees for maintaining a cheque account, including monthly maintenance fees, overdraft fees, and fees for using ATMs outside of the bank’s network.

How do I write a cheque?

To write a cheque, fill in the date, payee’s name, the amount in both numbers and words, and your signature. You may also write a memo to note the purpose of the cheque.

What is an overdraft in a cheque account?

An overdraft occurs when you spend more money than is available in your cheque account. This can result in overdraft fees unless your bank offers an overdraft protection service.

  • Checking Account: The US term for a cheque account.
  • Current Account: Another term for cheque account commonly used in the UK.
  • Overdraft: A facility that allows a cheque account holder to spend more than their current balance.
  • Savings Account: A bank account that earns interest and is intended for saving money with limited access.

Online Resources

  1. Investopedia: Checking Account
  2. Bankrate: What is a Checking Account?
  3. The Balance: Types of Bank Accounts: Checking, Savings, and CDs

Suggested Books for Further Studies

  1. “Accounting Made Simple: Accounting Explained in 100 Pages or Less” by Mike Piper - Simplifies accounting concepts including bank accounts.
  2. “Financial Accounting For Dummies” by Maire Loughran - Provides comprehensive coverage of financial accounting principles and practices.
  3. “The Essentials of Finance and Accounting for Nonfinancial Managers” by Edward Fields - A practical guide to understanding financial statements and bank accounts.

Accounting Basics: “Cheque Account” Fundamentals Quiz

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