How Does a Check Work?

Drafting, or writing, the check is the first step in the process of how a check works. The person drafting the check usually writes out the name of the recipient of the funds, the amount and the date, and then signs it. In some cases, the person may provide the authorized signature, and another party may fill out the amount and recipient for the check. Both ways are acceptable.

Once a check is received, the person or business receiving it gives it an endorsement. This may be a signature on the back of the check. In other cases, the words "For Deposit Only" may simply be stamped on the back of the check, with or without the depsitor's account number stamped on it. The check is then taken to a bank at some point. For more information on dealing with check-related issues, see additional resources below.

Once a bank receives a check, it may or may not credit the depositor's account immediately, depending on the bank's policy. The receiving bank will normally submit the check to an intermediary bank, which will contact the bank the check is drawn from and request payment. After the bank that has the account agrees to pay, the depositor's bank account is credited, the payer's bank account is debited, and the check is said to have cleared. For more information on the check process, see additional resources below.

It used to be that a person could write a check without having the necessary funds in the account, expecting that by the time the check was processed, the funds would be available. This is called floating a check. However, many businesses are now stripping the routing number, account number and amount off of a check and processing it immediately through an electronic system. In some cases, accounts can be debited and credited nearly immediately through an electronic funds transfer. In many cases, the check is returned to the writer on the spot. For more information on electronically converted checks, see additional resources below.