Advantages and Disadvantages of cheques

• Making payments by cheque has several advantages and disadvantages

Advantages of making payments by cheque

• It is more convenient than carrying cash around.
• Payments can be stopped if necessary.
• Cheques are safer if crossed.
• One does not have to count notes and risk making counting mistakes.
• A cheque can be drawn up anytime.
• Some are negotiable and can be endorsed in favour of a third party.
• They can be post-dated.
• They can be traced if lost.
• Can be posted more cheaply.
• A customer is send a statement at the end of each month.

Disadvantages of cheques

• Cheques are not legal tender and other creditors may refuse to accept them.
• They may be valueless if the drawer has no funds in his/her account.
• Depositing cheques into an account is time consuming.
• Cheques are not suitable for small amounts.
• People without bank accounts will be inconvenienced by crossed cheques.
• Banks charges are levied on cheque books and dishonoured cheques.

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