The Definitive Guide to Reading Canadian Checks: 8 Simple Steps (2023)
Canadians still write over a billion cheques annually despite the decline in paper cheque use.
However, many Canadians have forgotten or are unsure of how to read a cheque because they aren't used as frequently.
You've come to the right place if you need a quick review or are interested in learning how to read or write a cheque for the first time.
Here, I'll walk you through the steps of interpreting a Canadian bank cheque (of any bank) so that you'll be prepared to use one in the future.
The Fundamentals of Understanding a Canadian Check
Cheques in Canada are, for the most part, indistinguishable from Bank cheques can vary slightly in appearance from one financial institution to another.
However, every check must include the following standard information:
- Information that can personally identify you (name, address, zip code).
- A payee line ("pay to the order of") indicates who the money should be sent to.
- (Written) dollar amount line
- Money amount (numeric) input box
- Signature (on the back of the check): Endorsement
There should also be a series of numbers, known as the MICR encoding line, at the bottom of every Canadian check.
Here is a TD Bank blank check illustration for your perusal:
In most cases, the entire top left corner will be used to display the account holder's personal details.
You would expect to see your full legal name, for example, on a personal bank account.
This is the name that appears on all of your official documentation, and it may include a title, like "Dr." , Mr , Mrs including other examples
The legal business name that is on file with the bank will appear at the top of the account statement if it is a business account. Keep in mind that your "doing business as" (DBA) name is not included in this listing.
The business's legal name, "123Alpha LLC," rather than its DBA name, "John's Quick-Stop," will appear on the check.
Your bank needs to be updated with any business name changes.
The account holder's address goes on the line directly beneath their name (it could span two lines, depending on the size of your home).
This line displays the primary residence address that your bank has on file for you if you are an individual.
Business cheques will have the company's primary mailing address printed on them, which is the same address the bank should have on file.
Verify that the address you have entered is correct. If you ever get a cheque returned to you, it's important that you send it to the right address.
As soon as you settle into a new home, it is imperative that you notify your bank and the appropriate authorities so that your chequebook and registered bank address reflect your new location.
3 Zip/Postal Code
Include the postal code for your Canadian city, town, or region as part of your address.
Since many places in Canada share names, using the correct postal code is essential to ensuring that payments are properly allocated.
Amount Due In The Order Of
It's safe to say that the payee line on a Canadian check is among the most crucial parts of the document. Find the name of the person or company receiving payment here.
For the most part, the name on the cheque should match that of the person or company making the deposit.
It is important to use a person's legal name when dealing with official documents. For instance, if you want to write a check to your brother Joe, you should use his legal name, which is "Joseph." When it comes to this, some banks are more stringent than others.
Some financial institutions will not cash a check if the payee's name doesn't exactly match the one on file, while others have no problem with a nickname.
It's the same deal with company cheques. When making a check payable to a company, you must always use the company's legal name, not its DBA.
Make sure the name is legible by writing it out clearly so there is no room for error. Don't use signature script like this.
Sum in Dollars Line 5
After deciding who will be receiving compensation, the next step is to establish a payment schedule. The dollar amount should be written out in full, with decimal places and punctuation, on the line designated for that purpose.
The reason for this is so that no one will be confused by the monetary value indicated in the corresponding box (see below).
In addition, this safeguards against number manipulation (changing a 63 into an 83, for example) by crooks.
Words like "sixty-three" and "eighty-three" are obviously dissimilar. There is no way for a thief, no matter how skilled, to make a fully spelled-out word match the numerical value.
Exemplified below are some common formats for writing numbers:
A cent amount (such as an additional nickel or dime) should be represented as a fraction of 100.
Consider a hypothetical sum of $100: Twenty dollars would be represented by a hundred dollar sum followed by 20/100. For example, 50 cents would be written as 50/100, 75 cents as 75/100, and so on.
Don't stress out about simplifying the fraction like you learned to do in school. A dollar has 100 cents, so the fractional part of the amount should always be written as a multiple of 100.
#6 Dollar Amount Box
There will be a blank box to the right of the dollar amount line, with a "$" symbol in the far left corner.
The numeric equivalent of the number you just wrote out to the left goes in this box, the simplest one on the cheque.
Don't forget to factor in any cents that may be involved in the payment. In the absence of cents, either use an even digit or a decimal followed by two 0s (i.e. e , $55 for this to be indicated by the 00)
For me, it's all about how precise the figure is.
In a Canadian check, this is one of the less crucial fields. You can include a short note explaining the cheque's purpose in this space.
Its significance to individual bookkeeping exceeds that to the financial institution. Many financial institutions do not mind if the memo line is left blank.
However, if you're giving someone a check, it's courteous to fill it out.
Even if the memo line on a check you received was left blank, it's a good idea to fill it in so that you have a record of the transaction.
Memos need not go into great detail. The best memoranda get right to the point. As an illustration of a good cheque memorandum:
- Holiday present
- "Invoice 123 paid in full"
- "35 hours worked, payroll check dated 9-9-2022"
- Unit 1A Rent
You should also write the same memo on the back pages of your chequebook if you're sending money to an individual or company.
You'll be able to see who got paid and for what by whom come tax time with this information.
8. Signature (On Reverse Of Check)
Finally, on the reverse of the check, there is a space for an endorsement. Typically, it'll be a blank line that's perpendicular to the writing on the front of the check.
The person making the deposit should sign here.
This space is NOT to be used by the person or entity issuing the check.
This line is for identification purposes only and will be used to verify the person who deposited the check.
The bank can determine who signed the check (or whether it was forged) if there is ever a dispute or suspicion of fraud by comparing the signatures on file.
Most financial institutions will not accept a check for deposit that has not been personally endorsed by the recipient.
It is requested that you sign your name on the back of the cheque.
This helps verify that it was actually you who deposited the check and that your signature matches the one on file at the bank.
Canadian Check MICR Line Explanation: How to Read the Encoding
Have you ever looked at the bottom of a Canadian check and wondered, "How do you read that?" With your newfound knowledge of Canadian cheques, it's time to examine the MICR encoding line in greater detail.
There is crucial check id information encoded in this futuristic-looking numerical line:
- That number on the cheque (in the order that they appear in your chequebook).
- The branch/transit index
- This is the identification/institution number
- A reference to a bank account number
If you're unclear about what an RBC bank cheque looks like, consider this:
Let me now explain the significance of each of these figures.
Amount of the Check
The cheque number begins at the far left. This represents the cheque's position in the chequebook and can be anywhere from 1 to 100.
An example of this would be writing "001" on the first cheque in the book and "100" on the last one.
The Branch/Transit Number
This account has a special five-digit code known as a transit number that is associated with the branch where the account was opened.
As long as your bank account is active, your transit number will not change. If you move to a new city and start banking at a different branch of the same bank, this will still be the case.
You can't get a new branch number unless you close your account and open a new one.
One's Designation Number (or, more formally, One's Institution Number).
The designation number follows the transit number to the right. Each and every Canadian financial institution has its own special three-digit code.
Similarly to how all RBC bank locations in Canada use the same three-digit institution number, all TD banks in the country will use the same three-digit designation.
The account number for the bank is located to the far right of the MICR number. Each and every one of your bank accounts has its own unique combination of
The designation and transit numbers on your cheques may be shared with other people, but your account number is always yours alone.
You should know how to read a Canadian cheque inside and out, whether you're writing one to pay a bill, receiving one from an employer, or just looking for your account number.
Continue reading for a more in-depth explanation of the cheque-writing process in Canada.
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