When you receive a cheque, you need to cash it. The best way to do this is through your own bank account. If you do not yet have a bank account, see the article titled “How to open a bank account” for instructions.

Depending on the account you have, cashing cheques will not cost you additional money. You can cash the cheque at either the teller at your bank branch or by using an Automated Teller Machine (ATM) at your bank.

When cashing a cheque you need two things:

1. Your bank card
2. Identification

Most banks have a 5 day holding period before you can get your money. When you cash a cheque, the bank returns the cheque to the bank of the person who wrote the cheque. Then the money is transferred from that bank to your bank. If there is enough money in that person’s account, the money will be transferred to your bank and put into your account. If there is not enough money in that person’s account, the cheque but not the money will be sent back to your bank and you will not get your money. It usually takes 5 days to do all of this.

There are ways to minimize the holding period. Get to know your branch and the staff. You may be able to get the holding period reduced, if they know you and trust that they will get the money from the person who wrote the cheque.

All banks must cash a government of Canada cheque for free, even if you do not have an account with the bank. This includes GST/HST rebates and income tax refunds. You will need to take proper ID with you to the bank. This would be one piece of ID with both your photo and your signature. You should check to see if your province issues a photo ID card for those who do not drive, such as the Ontario Photo Card (see article titled “Ontario Photo Card”). If you don’t have any ID that has both, you will have to show 2 pieces of ID. In Toronto, any Royal Bank of Canada branch will cash your Ontario Works cheque (http://www.toronto.ca/socialservices/faq.htm#cash )

A good option, if it is possible, is to have your pay or pension (for example, Ontario Disability Support Program (ODSP) in Ontario) deposited directly into your bank account. The money is immediately available to use and there is no cost to you.

As a last resort, you can use a cash advance store to cash your cheque. These stores will cash your cheque immediately, as long as you have proper identification. It will cost you to use this service. The most common fee is about 3% of the total amount you want cashed. There is also a $3.00 fee per cheque. So, it would cost you $18 to cash a $500 cheque. This might not seem like much. However, if you did this each month for a year it would add up to $216 that you could have used to buy something else.

You will need to sign your cheque on the back in order to cash it. You should never sign it in advance. Once the cheque is signed, it is the same as cash. If it is lost or stolen, anyone can cash it once it is signed. Always sign your name the same way. This will help, if someone steals your cheque and cashes it. If the signature is not the same as you use, it proves that you did not cash it.

It is not recommended that you sign a cheque over to someone else (that is giving a cheque made out to you to someone else to cash). Remember that once it has been signed by you it is the same as cash. If the person loses it or it is stolen, the chances are that the money will be gone.

If you are writing a cheque to cash yourself, do not make the cheque out to “cash”. Instead, make it payable to yourself. That is, put your own name on the “payable to” line.

Here are some other tips on writing a cheque:

1. Always use a pen (never a pencil) to write a cheque so that it can not be erased and changed.
2. Never sign a cheque that does not have the name of the person it is payable to written on it.
3. Always sign a cheque with the same signature.
4. When filling in the dollar amount (both in number form and letter form) always draw a line through any blank space so no one can add or change the amount.

For more tips on “How to write a cheque safely”: http://banking.about.com/od/checkingaccounts/a/how2writeacheck.htm

For a visual example of how to write a cheque: http://banking.about.com/od/checkingaccounts/ig/How-to-Write-a-Check

For more tips on Cheques in Canada:

Identifying the bank, branch and account numbers printed on a cheque. http://www.tdcanadatrust.com/lending/cheque.html

In today’s world we have many different choices on how we can pay for something we want to buy. This section will explain many of the options people have to do this.

Cash

The one that is most familiar to all of us is to pay for a purchase using cash. We simply reach into our pocket or open our wallet and if we have enough money we can buy the things we want or need. Be careful to keep your money in a safe place. If you lose your money there is no way to get it back. For safety reasons it is a good idea to never carry too much money with you. If you lose too much cash you may not have enough to pay all of your expenses.

Using cash can be a good way to control your spending. Take only a predetermined amount of cash and limit your spending to that amount. To learn about Canadian coins and how to make change try ConnectABILITY.ca’s Money Magic arcade game https://connectability.ca/2010/10/01/money-magic

Cheques

Cheques are one way to pay for purchases or bills when you do not have the cash on hand or would like to have a record of your spending. With the increased popularity of credit and debit cards (mentioned below) cheque payment is not as common as it once was. Cheques are still useful for making payments when cash is not a good way to pay, such as making a payment through the mail. Never send cash in the mail. This is because there is a higher risk it could be lost or stolen. If you send money in the mail you do not receive a receipt right away, as you do when you buy something in a store. Before writing a cheque, make sure there is enough money in your bank account to cover the cheque. When the cheque is cashed money will be taken out of your bank account. If there is not enough money in your account, you will be charged a NSF (Non-Sufficient Funds) fee of $15 to $45 by your bank. If the cheque was for a company or store, they may also charge you a NSF fee of $15 to $30. Writing a cheque and not having enough money in your bank to cover the cheque could cost you a lot of money.

Credit Cards

A credit card allows you to go into a store and buy something even if you do not have the cash to pay for it right now. Credit cards are issued by banks to people. In order to receive a credit card you must fill out an application. The bank will then review the information on the application to determine if you qualify to get one. The bank looks at how much money you have and how much you earn to decide if you are a person who will have enough money to pay for the stuff you purchase with your credit card.

Credit cards are plastic cards that fit into your wallet. To buy something with a credit card your card is swiped in a machine with the store teller. You must then sign your name on a receipt to show you approve of the purchase. You may also put the card into the machine. If you have a computer chip card, insert it into the machine and use the PIN, you will not be required to sign the receipt.

The machine reads information on the card and you then enter a PIN (Personal Identification Number) that only you know. Entering your PIN is good security because nobody else should know what your PIN is and will not be able buy anything with your card. You should never give your PIN to anybody. You can set the PIN on your card using the ATM-bank machine. If you are unsure how to do this you can ask the bank teller and they will assist you.

Credit cards make buying things easy. But, be careful! When you use a credit card you are spending money and will have to pay the credit card company when the bill comes in the mail. If you have bought too much on your credit card you may not have enough money to pay the bill and all of your other expenses. When you do not pay the credit card bill by the due date you are charged interest. Interest is extra money you have to pay the credit card company. Interest rates can be as high as 20%. That means for every $100 you spend with your credit card you will have to pay an extra $20. So, the $100 purchase is now costing you $120.

Be very careful when using a credit card because it is very easy to spend too much and end up owing a lot of money!

If you are unable to make the full payment, it is very important to pay at least the minimum monthly payment each and every month so that you will continue to have a good credit history. Your credit history could have an impact on a number of areas including renting an apartment.

Debit Cards

Debit cards look very similar to credit cards. The big difference is that debit cards allow you to buy things by taking the money you have in your bank account and transferring it to the store. You can only make purchases with a debit card if you have the money in your bank account. If you do not have enough money in the bank, you cannot buy what you intended to.

An advantage with debit cards is that you can never spend more than you have in the bank. That means you will not end up owing a lot of money for things you purchased.

It is still very important to make sure you do not over spend with your debit card. If you buy something using your debit card, make sure you leave enough money in the bank to pay for other expenses you have, such as groceries, rent, phone, cable TV and other bills.

Debit cards are used the same way as credit cards. They are either swiped or put into a machine at the cashier and you then enter your PIN. Just like credit cards- Never give your PIN to anyone!

For more information on debit cards and safety see the article “Debit cards, Online Banking and other Bank Account Information”.

Pre-Loaded (Pre-Paid) Credit Cards

Pre-loaded credit cards are used just like a regular credit card except you must pay money on the card before you use it. So, if you have one of these cards you go to the bank and give the teller money or have the money transferred from your account to the card. You can then buy things with the card until you spend all the money you loaded on the card. The advantage of having a credit card like this is that you can put just as much money as you can afford on the card. It works well when you are budgeting, as you can make sure you leave enough money in the bank to pay your other expenses. Also, like a regular credit or debit card you need to enter a PIN when making a purchase. This means that if you lose the card nobody else will be able to use it. There are often service fees that you will be charged when using a pre-paid credit card so check with the bank before making this decision.

Before you start using a credit card, pre-paid credit card or a debit card make sure you understand what fees you may be charged. If you need help understanding what the fees are and how much it will cost you to use it, bring someone you trust with you. This person can be a family member or a support staff who can help you make an informed decision.

What Happens if I Lose my Bank Card, Credit Card, or Pre-Paid Credit Card?

From time to time bank cards can be lost or stolen. It is helpful to record your card numbers and keep them in a safe place so you can call the credit card company or bank if you lose the card. The card will then be cancelled and nobody who finds it will be able to use it. You will then be sent a new card with a different number on it. You will also be sent a letter in the mail with a new temporary PIN number. You can change your PIN number at a later date so that it is a number that is easily remembered and unique to you. Never write your PIN on the card because if someone finds your card they will have the PIN and be able to use it.

Useful resources about Pre-paid Credit Cards:

Canada’s Best Prepaid Mastercard and Visa Cards: Reloadable and Non-Reloadable “Credit Cards” http://dan.matan.ca/Canadian-Prepaid-Mastercard-Visa-Card-Reviews-Information

Credit Cards, Financial and Consumer Agency of Canada

https://www.canada.ca/en/financial-consumer-agency/services/credit-cards.html

Store Cards, Grocery Cards & Gift Cards

Store, grocery and gift cards are basically the same thing. They are used just like a pre-paid credit card. Money is loaded on the card and the card can be used until all the money is spent. The main difference between these cards and pre-paid credit cards is that they can only be spent at the store they were issued at. For example, a Wal Mart gift/ store card can only be used at a Wal Mart. These cards do not require a PIN. So, if you lose the card anyone can use it.

Purchasing grocery cards is a good way to make sure you have enough money set aside to buy the food you will need for the month. If you buy $200 in grocery cards for No Frills or Food Basics you can only use the card at that store. This means you cannot spend the money at other places. Using these cards is a good way to help budget your money.

Automatic Withdrawals (Preauthorized Withdrawals)

You can also set it up to have money taken directly out of your account to pay a bill. This can only happen with your permission. Automatic withdrawals, also known as pre-authorized withdrawals, are a way to pay for bills or services directly from your bank account. To set up this arrangement you must provide your bank account information to the company you want to pay. This is often done by giving the company a cheque with your account number on it and the word VOID written across the cheque. Writing VOID on the cheque will prevent anyone else from using that cheque to take money from your bank account. Also, most banks have a pre –authorized payment form that can be used in place of a void cheque. This form is free of charge and contains the institution number, transit number and account to help direct deposits to or take payments from your account.

Automatic withdrawals are normally used for bills that are paid on a regular basis, such as phone, cable TV, internet service, magazine subscriptions, etc. This type of payment arrangement is not normally done for one time purchases.

It is a convenient way to pay bills. It prevents you from forgetting to pay your bills on time. However, it is important that you make sure you leave enough money in your bank account to pay the bill. You must never forget that the bill needs to be paid or take too much money out of the bank. In these situations, when the company attempts to withdraw the payment there would not be enough money to cover the cost. If you do not leave the proper amount of money in your account to cover the bill the bank and the company you owe money to will charge you a NSF (Non-Sufficient Funds) fee. This can range from $15 to $45 from both the bank and the company you owe. That means not having enough money in your bank account to pay for the bill could cost you a lot of money!

Pay as you go plan

Pay as you go plans have increased in popularity recently. These monthly payment plans do not require you to sign a term contract. In a term contract you agree to pay a monthly fee for services such as cell phones or fitness clubs. With pay as you go plans you receive the service for the month. If you do not have the money or choose not to continue with the service the following month there is no penalty or early cancellation fee. If you decided to continue with the service, such as a cell phone, you simply need to make the payment for the month and the service will be restarted. You have the freedom and flexibility to start and stop whenever you decide.

Bank Access Card and Debit Card

When you open a bank account, you will be given a bank card that you can use to access your money. This is also called a “debit card”. When you receive the card, you will be asked to choose a four digit Personal Identification Number (PIN) that you will key in whenever you use your debit card. Protect your PIN number by not writing it down. Be sure to memorize the number and remember to never share it with anyone else.

Your debit card and PIN number is used to:

• Access your bank account when visiting the bank
• Access money through an Automated Teller Machine (ATM)
• Pay for goods and services from stores and service providers that accept Interac Direct Payment. Payment comes directly from your account.

Debit Card Safety Tips

• Sign the back of your cards as soon as you get them. This is a safety measure to help ensure that if your card is lost or stolen, it can be returned to you. Signing your card also confirms your signature.
• Keep your card number or a photocopy of your card and the contact number of your bank in a secure place in case your card is lost or stolen. It is important that this information is kept in a different place than where you normally keep cards, for example at home in a safe box or drawer where you won’t lose it.
• Set up a maximum daily withdrawal limit with your bank. This means you can only take out a certain amount of money from the bank machine at a time. You can choose the withdrawal limit. This will help you if your PIN is stolen, or if you are robbed while withdrawing money.
• Cut up any old debit cards that you are no longer using before throwing them away.
• Your debit card has a computer chip built into it. Insert your card into the debit card point-of-sale machine. If the point-of-sale device is not chip capable it will prompt you to swipe your card. It is important to avoid any unnecessary swipe of the card. This will reduce the possibility of your card information being taken by someone trying to steal your information.
• Use your hand or body to hide the key board when you are putting in your PIN during every transaction conducted at an Automated Teller Machine (ATM) or at the checkout.
• Keep an eye on your debit card when using it to buy something at the checkout to make sure someone is not trying to copy the information on your chip card.
• The bank will provide you with a monthly list of all the money that goes into and goes out of your bank account. This can be on a computer or a paper copy that is mailed to you. Check this banking statement regularly and contact your bank immediately if you detect any unusual activity, for example, purchases you did not make or missing charges.
• Let your bank know immediately, if your debit card is lost, stolen or stuck in an Automated Teller Machine (ATM).
• Memorize your PIN – only you should know it. If you suspect that someone knows your PIN, even a friend or family member, change it immediately.
• Choose a unique PIN. Never use obvious information, such as, your telephone number, date of birth, address or Social Insurance Number. These numbers are often stored in the same place as your debit card which can allow others to easily guess your PIN.
• Be aware of who is around you when you are taking out money. Try to only use well lit areas. Using the bank during the day when the bank is open and there are bank employees around is smart thinking.
• When using an Automated Teller Machine (ATM), if you suspect anything unusual do not use the machine and report it to your bank immediately.
• Remember to take back and put away your debit card after each use.
• Be alert. If someone is watching you or makes you feel uncomfortable, you can cancel the transaction and use a different machine.

Material sourced from https://www.interac.ca/

Tip: When using an Automated Teller Machine (ATM) try to use a machine from your own bank. If you use a machine from another bank, there will be a transaction fee of $1.50 or more charged each time you use the Automated Teller Machine (ATM).

What is an NSF (Non- Sufficient funds)?

If someone tries to cash a cheque that you have written and you do not have enough money in your account, banks do not have to pay it. The cheque is then returned to the person or company who tried to cash it through their bank letting them know that there is not enough money to cash the cheque.

In this situation, the fee that would be charged for an NSF cheque could be from $25.00 to $45.00 (labeled NSF Fee on your statement). The company that you wrote the cheque to may also charge you a fee for this.

Overdraft protection

At times you might accidently write a cheque for an amount that you do not have in your chequing account. Because this can happen from time to time, many banks have what is called overdraft protection. It is a good idea to get overdraft protection on your chequing account. Instead of getting charged from $25 to $42 for an NSF cheque, overdraft protection will allow you to avoid this charge. Overdraft will provide the account holder with an instant loan. A loan is a sum of money that banks will give to you to use for a certain period of time. A loan has to be paid back within an agreed to period of time and you will need to pay a fee for the use of this money, referred to as “interest”. The interest rate will be extremely high. However, if it is paid off quickly it is usually much less expensive than the NSF cheque fee. Some banks do charge a fee when an account balance falls below zero even if the account holder has overdraft protection. The good news is that it’s still significantly less than the NSF cheque fee.

5 day holding policy for cheque deposits

A bank may apply a 5 day “hold” on the funds you deposit by cheque. This means that you cannot take out or spend the money for 5 days after you deposit the cheque. This is done for several reasons, including the following:

• To make sure that the person or company who wrote the cheque has enough funds to cover the cheque
• To make sure that the person or company who wrote the cheque has not put a “stop payment order” on the cheque. A “stop payment order” means that, for some reason, the person or company does not want the cheque to be cashed.
• To check the cheque details with the person or company who wrote the cheque, to make sure that it has not been altered.

If the cheque has to be returned to your bank because it can’t be paid (because of non-sufficient funds; because the account is closed or because of a stop payment; etc.), your bank will take back the money that was put into your account when you cashed the cheque. This can happen even after the hold period has expired. You are financially responsible for any cheques deposited or cashed both before and after the hold period.

Tip: Instead of using cheques, you may want to have deposits made to your account electronically (direct deposit). This will mean that the funds deposited are not held and are immediately available.

Depending on your relationship with your bank, the bank may release the funds to you before the cheque clears. However, if it does this; it is actually extending a loan to you. If there is not enough money in the account of the person who wrote the cheque to cover it, the cheque will be returned to your bank because of non-sufficient funds (NSF). If the cheque writer’s bank is located in Canada, it takes about five to six business days for a cheque to clear and be returned because of non-sufficient funds.

Tip: When you open a bank account, you have the right to get a copy, in writing of the bank’s policy on holds on funds deposited by cheque and any other location specific banking policies.

Material sourced from Financial Consumer Agency of Canada http://www.fcac-acfc.gc.ca/eng/resources/faq/qaview-eng.asp?id=256

Online banking

Setting up online banking:

You should go to your bank’s website for information. Every bank has easy to follow instructions on how to set up online banking on their website.

There are many advantages to using online banking:

• It is fast, safe and convenient.
• There is no more need to travel to your nearest bank for basic services any longer.
• You can do your banking anytime – 24 hours per day, 7 days per week (24/7).
• No need to wait for a financial statement to come in the mail. All you have to do is login online and download a copy of your statement.
• With online banking there is no need to visit your bank to ask them to transfer funds from one account to another.

There are also some disadvantages of using online banking:

• Online banking has reduced personal interactions, since all the transactions are handled by the customer through the internet.
• When using online banking there is always a chance that the information may be stolen by someone who has been able to sign into your account. Banks have good security systems to guard such thefts but there still is a risk.
• When you are using online banking keeping your information safe and private is a big problem faced by many banks. So the customer must be aware of the security issues and protect their identity and other personal details from hackers. Hackers are people who steal personal information using computers or other electronic devices.

To make online banking a safe and secure banking experience you need to follow these steps:

• Avoid accessing your bank account from a public place with computers and internet access or a computer that is shared by a lot of people. If you happen to do so, then change your password as soon as you finish your banking transaction.
• Every time you finish using your online banking session, you need to sign out from the site rather then just closing the browser.
• Change your internet banking password after your first login and then do this regularly.
• Use a difficult password that makes it difficult for others to guess.
• Use a different I.D. and password for different internet accounts.
• Never share your passwords or login details with anybody.
• View your account often and check it with your receipts or records of what should have been deposited and taken out of your account. If there is anything which does not match with your records then inform your bank immediately.

Safety Tip

If a company or government organization requests a copy of your bank statements, it is best to ask a staff at the bank if this is a reasonable request. The bank staff will provide you with the safest way in which to provide the information being requested.

Choosing a secure password for online banking:

• Do not use words or phrases that have personal importance.
• Mix letters, numbers and symbols, and use case sensitivity (upper and lower case letters)… (i.e. instead of “password,” try “pAsS34%(6*2woRd,” etc.)
• Find a good way to remember your password. A good way to do this is to choose the first letters of a sentence that you will remember. e.g. “I have 2 dogs called Rover and Fido” gives: Ih2dcRaF. Use punctuation to your advantage. To incorporate a colon into the previous example, remember the sentence as “I have 2 dogs: Rover and Fido”, which would give: Ih2d:RaF 4
• Try to memorize the password, and avoid writing it down. Somebody could very easily find the slip of paper that the password is written on.
• The longer the better. Don’t make a password that’s less than 6 numbers /letters. Anything less than this can easily be found out by using computer programs.
• Take the street you grew up on, and your first pet/something hard to guess from your past, put a number sign in between, substitute some letters for numbers, and, voila! A great password. For example: Bill grew up on Ocean Avenue, and his first pet was Rocky. His password would be: 0c3an#r0cky. You can add random capitals to make it more secure.
• Do not use the same password for everything. If someone finds this password, they would have access to everything. At the very least, make at least one password for sensitive things (i.e. online banking, etc.) and one for everything else (i.e. email, etc.).
• One other way is to use a word, for example, wikihow, and move your fingers up one row on the keyboard. Wikihow becomes 28i8y92.

Material sourced from http://www.wikihow.com/Choose-a-Secure-Password