What Is a Student Checking Account?

What Is a Student Checking Account and Do I Need One?

A student checking account is a checking account with special features designed just for young people who are beginning their independent financial lives. If you’re heading off to college soon, it’s a super busy and exciting time. You may be focused on things like which classes to select and how to set up your dorm room. We get it! But opening a student checking account might be worth a bit of your attention, too. It can be a good way to start banking at a low cost.

Even if college is a few years away, a student checking account could help you secure some much-desired financial distance from mom and dad. It’s a good way to start taking responsibility for your money and how you manage it.
So let’s look at what you need to know about these specially-designed-for-students accounts. We’ll cover:

•   What these student checking accounts are

•   How they differ from standard checking accounts

•   The pros and cons of student checking accounts

•   How to get one.

Student Checking Accounts, Explained


Let’s get going and answer the question, “What is a student checking account?” It’s a lot like a regular checking account. It’s a place to stash your cash safely. You can then access those funds to make purchases and pay bills using a debit card, direct transfers, and possibly paper checks, too—though some banks are eliminating this feature.

However, a student checking or college checking account is, as its name suggests, designed with students in mind. (You may sometimes see it called a college student checking account, by the way.) It’s usually only available to people in a specific age range, about 14 to 25, though this will vary from bank to bank. (If you’re a minor under 18, you may need to open the account jointly with a parent.)

Student checking accounts may offer special perks that make sense for students. For instance, you might have the ability to connect your account to your college ID, which can be super convenient. Or you might show your school pride by getting a debit card with your university’s logo on it.

Since most students are just starting out financially, these products tend to have low or no monthly maintenance fees and minimum balance requirements. Other costs, like ATM fees or overdraft fees, may also be waived.

In other words, these accounts allow students to start to learn good financial habits and banking basics — which is why opening one can be a good item to add to your college-planning checklist. At a moment when you may be learning how student loans work and what it means to go into forbearance, it’s wise to make sure that you are also getting your everyday banking needs managed.

How Does a Student Checking Account Work?


As mentioned, a student checking account works a lot like a regular checking account does. You fund the account with money, which you can access using ATMs, checks, and your debit card. These days, a lot of banks make it easy to initiate direct peer-to-peer transfers, too.

To open the account, you may need to bring a parent with you, depending on your age. If you’re 18 or over, you should be able to do it on your own as a legal adult. You’ll need to provide the bank with personal information and documentation, such as your driver’s license (or other government-issued photo ID) and proof of address.

Although they tend not to have monthly maintenance fees, some student checking accounts do carry minimum opening deposits. This means that to open the account, you need to give the bank a bit of cash. The amount is usually fairly low—on the order of $25 or so.

Once you fund your new account and everything is finalized, you’ll be able to use your debit card to make point-of-sale transactions and purchases. You can also take cash out of your account through ATMs or using an in-person teller transaction, if your bank has physical locations.

That said, many banks today are online-only and still totally legit. These financial institutions often offer checking and savings accounts with higher interest rates, or APYs, and lower (or zero) fees than bricks-and-mortar banks. So you may still forego monthly maintenance fees even after you age out of your student checking account.

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What Is the Difference Between a Student Checking Account and a Normal Checking Account?


The main difference between a student checking account and a standard checking account is right there in the name. Student checking accounts are designed for students!

Along with their age restriction and student-specific perks, though, the main difference between a student checking account and a normal checking account is the fee structure. Student checking accounts are far more likely not to have monthly maintenance costs than other types of checking accounts. They may also waive overdraft fees, ATM fees, and other expenses. This can make them a great fit for a student on a budget.

However, as with opening any banking account, make sure to read the fine print or ask questions to make sure you’re clear on fees and expectations. It’s wise to know policies on minimum monthly balance, negative balances, and other features in advance. No surprises, right?

Pros of a Student Checking Account


There are lots of great reasons to open a student checking account, including:

•   The ability to get some financial independence from mom and dad

•   Low or non-existent monthly maintenance costs

•   Waived-fee overdraft protection, zero-liability fraud protection, and other built-in safety nets created with students in mind

•   Special perks, such as university-branded debit cards

Cons of a Student Checking Account


That said, there are a few drawbacks to student checking accounts, as well:

•   Features may be limited. For example, some student checking accounts don’t carry check-writing privileges

•   Student checking accounts are limited to customers within a certain age range. Once you age out, the bank may automatically move you to an account that assesses a monthly maintenance fee and other charges.

How Can I Get a Student Checking Account?


As mentioned above, opening a student checking account will require you to provide certain documentation and identifying information to the bank. Typically, you’ll be asked to share:

•   A government-issued, photo ID, such as a driver’s license or passport

•   Potentially a second form of ID, such as a student ID card

•   Proof of address, such as a utility bill or other official statement with your address on it

•   If you’re under the age of 18, you may need to bring a parent with you to jointly open the account.

Is a Student Checking Account Better Than a Normal Checking Account?


A student checking account is different from a normal checking account in many ways that may make them more attractive to, and suited for, students. Among these perks are their low fees, built-in safety protections, and college-specific features.

That said, if you’re already out of college and “adulting” or are college-age but not attending school, a normal checking account may have fewer limitations. It’s possible to find a free one or waive the monthly maintenance fee by meeting certain requirements. The choice, as with most financial products, is all about what suits your specific lifestyle and needs.

Things to Consider When Looking for a Student Checking Account


As with any financial product, it’s worth shopping around before you choose a student checking account. Although many of them share the same sorts of features, here are a few items to take a close look at as you browse:

•   Monthly maintenance fee Free is best, of course, but if there is one, see if there are manageable requirements that allow you to have it waived.

•   ATM fees, overdraft fees, and other costs Whether you’re a freshman or a college senior, you want your checking account to be as forgiving as possible. Look for as many waived fees or free services as possible.

•   Overdraft and fraud protection Scammers are out there! When it comes to financial mishaps, banks should be on your side. Look for free overdraft protection services and $0-liability fraud protection, as well as free debit card replacement services.

•   Student-friendly perks Although they’re not essential, additional Easter eggs such as the ability to connect your account to your student ID or a debit card that sports your school’s colors may seal the deal when you’re shopping around.

The Takeaway


A student checking account can be a great way for college students and other young adults to kickstart their financial life. These accounts are designed with low fees and monthly requirements, which can be helpful for those who are just beginning to bank. They also usually carry specific features designed with students in mind. If you’re in your late teens or early twenties, shopping around and seeing if these accounts work well for your needs is a wise move.

That said, whether you’re a college senior or a plain-old senior, there are plenty of options out there if you’re looking for free checking. SoFi is one! In fact, SoFi’s online bank account, when opened with direct deposit, does away with monthly maintenance fees, overdraft fees, and minimum balances. That means you keep more of the money in your account. You also earn more on your dough: We offer a hyper competitive interest rate up to 1.25% APY so your cash grows faster.

Check out the smarter way to bank with SoFi.

FAQ

What are the benefits of a student checking account?

Student checking accounts tend to have low costs and lots of in-built protections to help students learn how to be financially responsible. There are often extra perks like school-branded debit cards and more.

What do I need to open a student checking account?

As with a regular checking account, the process of opening a student checking account requires official identifying documentation. If you’re a minor, you may need a parent to co-apply with you. You may also need a small opening deposit of, say, $25.

Can a 16-year-old open a checking account?

Yes, a 16-year-old can open a checking account — but as minors, they’ll need an adult to co-apply with them.


Photo credit: iStock/RgStudio

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 1.25% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 0.70% APY on all account balances in their Checking and Savings accounts (including Vaults). Interest rates are variable and subject to change at any time. Rate of 1.25% APY is current as of 4/5/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Bank Guarantees: What You Need to Know

Bank Guarantees: What You Need to Know

A bank guarantee is a promise by a financial institution that it will assume liability for a contract if one external party fails to uphold its obligation to another. In this way, the bank acts like a cosigner for a buyer or borrower on a business agreement, reducing the risk for the seller or lender.

For a small fee, bank guarantees often enable small businesses to enter into contracts with larger companies with which they otherwise would not be able to do business. In this article, we’ll explore:

•   How bank guarantees work

•   The different types of bank guarantees

•   The benefits and downsides of bank guarantees

•   How they differ from letters of credit.

What Is a Bank Guarantee?

Here’s what a bank guarantee is: It’s a financial instrument that adds confidence to riskier business deals. If, after doing its due diligence, a bank feels confident that an applicant (the debtor) will be able to uphold their contractual obligations, the bank will offer the guarantee to the other party (the beneficiary).

And if the applicant fails to fulfill that obligation to the beneficiary? The bank will cover the loss.

Bank guarantees are usually a part of more complex financial transactions between businesses. The average borrower won’t need to worry about bank guarantees for auto loans, mortgages, or personal loans.

Instead, companies utilize bank guarantees for much more complicated contracts around the provision of goods and services. If a vendor fails to provide goods or services that have already been paid for, a bank guarantee ensures reimbursement for the business using that vendor. Conversely, if a buyer fails to pay for goods or services that have already been delivered or rendered, the bank guarantee covers the unpaid balance for the seller.

Because a bank guarantee might protect a buyer or a seller, it’s easier to think of them in terms of the beneficiary (the company that requires a bank guarantee to move forward with a contract) and an applicant (the company that must apply for the bank guarantee to close the deal).

How Do Bank Guarantees Work?

If a contract includes a bank guarantee, that guarantee will specify an amount to be repaid (or goods or services to be delivered) and a set timeframe for that to happen. In addition, the contract will articulate the bank’s responsibility should the applicant fail to meet their contractual obligations.

To assume this risk, banks charge applicants a fee for the guarantee, expressed as a percentage of the cost or value of the transaction. While the fee will vary (perhaps from 0.5% to 2.5%), it is typically around 1%.

If the bank deems a contract particularly risky, it might require the applicant to offer collateral. Unlike with secured personal loans, where a house or car might serve as collateral, bank guarantee collateral is typically liquid assets, like stocks or bonds.

Types of Bank Guarantees

There are two main types of bank guarantees: financial bank guarantees and performance guarantees.

What Is a Financial Bank Guarantee?

With a financial bank guarantee, a bank has promised to repay a debt if the borrower (or buyer) defaults on the loan, meaning the payment. For example, an applicant may purchase goods and services from a large company, receive said goods and services, and never pay the bill. In this instance, the bank would settle the debt with the large company since it can’t come out of the borrower’s bank account.

What Is a Performance Guarantee?

A performance guarantee is just the opposite: If an applicant fails to perform the obligations laid out in contract (e.g., supplying parts to a company), the beneficiary can make a claim with the bank for the losses incurred from the non-performance of contractual obligations. Performance failure might also mean that, though the goods or services were delivered, they did not meet quality standards specified in the contract. In these situations, the bank would step in to offset those losses.

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Examples of Bank Guarantees

Bank guarantees can serve many purposes, usually between two businesses. Here are a few kinds of guarantees that banks often issue:

Rental Guarantee

A rental guarantee protects a landlord when entering into a contract with a company (like a restaurant or retailer) that wants to lease a space. This guarantee serves as collateral for a rental lease.

Advanced Payment Guarantee

An advanced guarantee protects a company that has paid in advance for goods or services that weren’t delivered. You may also hear this referred to as a cash guarantee. If the deal isn’t satisfied, the company that has paid will be refunded.

Shipping Guarantee

A shipping guarantee protects a carrier when a shipment (i.e., import) arrives before required documentation. It is designed to smooth this kind of transaction when the documents have not yet become available.

Pros of a Bank Guarantee

When considering bank guarantees, you’ll see the term “beneficiary.” Don’t jump to conclusions about which party that might be. Bank guarantees can provide benefits for both the beneficiary and the applicant.

Benefits for the Beneficiary

First, let’s consider how a bank guarantee can help the beneficiary.

•   Reduced costs: A large, international company might save money in a specific region or country by doing business with a local vendor who does not have an international presence. By requiring that vendor to acquire a bank guarantee, the large company can feel confident about the decision while reducing costs.

•   Reduced risk: As mentioned above, the bank guarantee reduces the risk for the beneficiary. If the applicant fails to pay or to provide services or goods as outlined in the contract, the beneficiary can expect reimbursement from the bank.

Benefits for the Applicant

Now, here’s how a bank guarantee can benefit the applicant.

•   Increased opportunity: Bank guarantees let smaller companies and startups earn business they might not otherwise. Their newness in an industry might otherwise elicit hesitation from potential customers; a bank guarantee is often the boost needed to get business deals rolling.

•   Low cost option: All things considered, typical bank guarantee fees are low, especially when small business owners are used to dealing with higher interest rates (5.5% to 11.25%) on their small business loans, according to Experian, one of the major credit reporting agencies.

•   Credibility: Before offering a guarantee, a bank does a comprehensive, accurate assessment of an applicant’s financial standing. Earning a bank’s backing through a guarantee demonstrates that the bank finds the applicant company to be credible.

Cons of a Bank Guarantee

Both beneficiaries and applicants may encounter drawbacks to bank guarantees when initiating a contract.

Added complexity

First and foremost, a bank guarantee adds a layer of complexity to deal-making and may slow down business decisions. Companies operating in fast-paced markets may not be able to afford the delay.

Collateral requirement

If a venture seems particularly risky, banks may require collateral from applicants; this can be risky for startups with limited funding.

Lack of guarantee

Ultimately, a bank may not offer a guarantee, which means the beneficiary needs to be ready to continue its search for a new company to partner with.

Bank Guarantees vs Letters of Credit

Bank guarantees, as we’ve mentioned above, are typically used by companies bidding on large projects. The bank guarantee can underscore the business’ financial credibility. It provides assurance that a company has the financial means to complete the project in question.

Though they share some similarities with bank guarantees, letters of credit are more common in international trade. With a letter of credit, the bank is involved to a greater extent. Essentially, the bank releases the funds that the buyer owes the seller only when the seller has completed its contractual obligation (i.e., shipment has been received.)

Letters of credit instill confidence in sellers (exporters) that they will receive payment once they have shipped their goods. Likewise, importers only have to make payments (to their bank) after they have received the goods, so their funds aren’t tied up with no goods to show for it.

The Takeaway

A bank guarantee is a useful financial instrument that instills confidence between two external parties entering into a contract together. Such bank guarantees promise that the financial institution will cover any debts to one party if the other party does not meet its obligations. Larger companies often require small businesses and startups to obtain a bank guarantee before doing business with them. These guarantees can help a small or new business secure large deals since the bank has shown confidence in them.

If you want confidence in your bank for your personal accounts, consider SoFi. We help you bank smarter by offering you higher interest and no fees when you open our online bank account with direct deposit. You’ll earn an excellent 1.25% APY while paying no monthly, minimum-balance, or overdraft charges.

SoFi: We help your money grow faster.

FAQ

What is the purpose of a bank guarantee?

The purpose of a bank guarantee is to add confidence to a contract between two parties; if one party fails to uphold its contractual obligations or defaults on a loan, the bank promises to step in and uphold the contract.

How can I get a bank guarantee?

If a business is requiring a bank guarantee to enter into a contract, contact your bank (or your business’ bank) and request an application. The bank will then review the application to determine your creditworthiness.

What are the types of bank guarantee?

There are two main types of bank guarantees: financial bank guarantees and performance guarantees. In a financial bank guarantee, the bank assures that a buyer will repay any debts owed to a seller. If the buyer does not, the bank will take on the debt. In a performance guarantee, the bank assures that the applicant will fulfill the tasks laid out in a contract. If the applicant does not, the bank will compensate the beneficiary to cover losses from the lack of contractual fulfillment.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 1.25% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 0.70% APY on all account balances in their Checking and Savings accounts (including Vaults). Interest rates are variable and subject to change at any time. Rate of 1.25% APY is current as of 4/5/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet

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Can I Use Checks With an Old Address?

Can I Use Checks With an Old Address?

If you’re wondering if it’s okay to use checks with an old address, the answer is yes…most of the time.

Encountering a checkbook with your old address isn’t so unusual these days. Checks can come in handy from time to time, but many of us don’t need to use them all too often in this era of online electronic payments. Because of this, it’s easy to see how a checkbook might collect dust and the address on the checks might become outdated.

Read on to learn when it’s possible to use checks with an old address. You’ll find out:

•   Can you use a personal check with an old address?

•   Can you use a personal check with a wrong address?

•   What about business checks with an old or wrong address; are they okay to use?

•   Do checks expire?

•   How can you update checks when you move?

•   What are alternatives to using personal checks?

Can You Use a Personal Check With an Old Address?

Can you use a check with an old address? It is possible to use a check with an old address on it as long as it still has the correct routing and account numbers on it. If those numbers properly identify which bank and account the money should come from in order to pay a check, you’re good to go. That being said, it’s a good idea to let the bank know about a change of address to ensure they send statements and other important info about the account to the correct location.

If someone were to use a check with an old address on it, it can be helpful to let the recipient know about the address being wrong just in case they need to send a receipt or create any other correspondence regarding the payment via mail.

But what if the check writer got a new bank account number or the bank changed routing numbers (this can happen, for instance, when one bank merges with another)? In this situation, it is necessary to order new checks with the correct information on them. This is a great time to update the address on the check, too. Making sure a check’s routing numbers and account number are accurate is something to take seriously. If someone knowingly writes a check for an account that has already been closed, this is considered a form of fraud known as writing a bad check. Because of this, it’s a good idea to confirm check details are current and accurate whenever you move or switch banks to, say, open a new checking account.

Can You Use a Business Check With an Old Address?

It is possible to use a business check vs. a personal check that has an old address on it as long as the account number and routing number are accurate. The main difference between business checks and personal checks is that business checks can be a bit harder to deposit in a personal checking account. This however doesn’t really affect the person writing the check.

Can You Use a Personal Check With a Wrong Address?

It’s fair to wonder, is it okay if my checks have the wrong address? Whether it’s a typo or you moved, this situation definitely happens.

While writing a personal check with the wrong address on it isn’t ideal, it is possible to use one. As mentioned earlier, as long as the routing number and account number for your checking account are accurate, the check can be cashed properly. All of that being said, the check writer may want to inform the check recipient of their current correct address in case they need to mail them a receipt or any other type of communication.

Can You Use a Business Check With a Wrong Address?

As explained earlier, it is possible to write a business check with the wrong address on it as long as the routing number and account number listed on the check remain accurate. Most businesses will want to order new checks with the correct address on them to avoid confusion surrounding where their business is located and where correspondence should be directed. But they don’t need to worry if they have old checks left to use up. They should still be fine to issue.

Do Unwritten Checks Expire?

How long will a check be good for? As long as someone keeps their account open and the correct account number and routing number remain on a check, they won’t expire. However, there is still a situation to consider. If someone closes a bank account, this means the checks associated with the account become unusable. Another situation to be aware of is that bank routing numbers can change, especially when banks merge. So it’s always worth confirming if a check’s information is up to date.

When Are Checks With an Old Address Unusable?

As we mentioned, checks with an old address on them only become unusable if the routing number or account number listed on the check are inaccurate. This causes problems because these numbers are used to verify that the check is good and identify the account the money needs to be withdrawn from in order to process the check.

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Ordering New and Correct Checks

If someone needs new checks for any reason — such as a desire to update their address — these are the steps they’ll generally take to order new ones.

•   Log on to their online bank account. It’s usually possible to order checks online or via a mobile account dashboard.

•   Request a counter check. If someone is really in a rush and can’t wait for new checks to come in the mail, they can go to a local bank branch and purchase counter checks. These will have your account information on them, and they typically cost $1 or $2 per check.

•   Review terms and fees. All banks charge different fees to buy checks or a checkbook, so double check how much doing so will cost.

Changing Your Address on Checks

Can you use checks with your old address? You can.

•   If you need to change the address listed on the checks in your personal checkbook, order more checks via one of the methods previously mentioned. This can be done online or in-person at the bank.

•   An alternative would be to use stick-on address labels to cover and replace the old address that appears on your checks.

Do You Need to Write Your Address on a Check?

Checks typically have an address already printed on them. Therefore it is not necessary for the check writer to write it on the check themselves. However, some people may prefer that only their name appears on their checks. Maybe they know they’ll be moving soon, or perhaps they simply prefer this for privacy and security reasons. If you do need to write your address on a check that doesn’t have your address:

•   Use blue or black pen

•   Print your new address under your name at the upper lefthand corner of the check

•   See if the business or merchant wants your phone number as well; this is a fairly common request so they can reach you if necessary. An altered check may not inspire complete confidence.

Do Checks Need an Address?

Checks do not need to have an address printed on them. However, if you choose to omit an address (say, because you know you’ll likely be moving soon), some businesses may hesitate to accept the check. They might ask for a form of ID or a phone number in case they need to contact you.

Alternatives to Personal Checks

If someone doesn’t want to write a check for whatever reason, these are some of their alternative payment options.

Money Orders

It’s possible to buy a money order from the post office and other select locations. Money orders are a very quick form of payment, and can cost less than $2 in fees.

Cashier’s Checks

A cashier’s check, which usually costs a small fee, can be bought at the bank and is a check that is guaranteed by the bank. It will usually require a visit to the bank to get one, though.

P2P Money Transfer Apps

Here’s a very convenient payment option: P2P money transfer apps — like Venmo — that allow users to instantly transfer cash electronically to an individual as long as they have enough money in their bank account. These may be free to use or can involve a small fee (a percentage of the transaction) depending on a few variables. (Sometimes e-checks, or electronic checks, are a payment option for utilities and other accounts. While not a P2P app, they do allow for a seamless transfer of funds.)

The Takeaway

As long as the routing and account numbers on the check are accurate, it’s possible to use a check with an old, incorrect address on it. That said, it’s a good idea to order new checks with the correct address on them to help lessen any confusion the wrong address might cause with check recipients. Having all your details correct can help make banking as simple as possible.

Here’s another way to simplify your financial life: Manage your money with SoFi. It’s a better way to bank. Sign up for online banking with direct deposit, and you’ll earn 1.25% APY, which happens to be 41 times the current national checking account average. What’s more, we don’t charge you any of the usual fees, like monthly, minimum-balance, or overdraft charges.

SoFi makes banking simpler.

FAQ

Does it matter if the address on my check is wrong?

If you’re wondering, “Can I use old address checks?” here’s the answer: It is possible to use a check with a wrong address on it. The key is to make sure the routing number and account number is still accurate on the check before using it.

Can you cash a check with an incorrect address?

Cashing a check without the correct address on it is possible. Just make sure the recipient knows the writer’s current address in case they need to contact them.

Do checks need an address?

Checks commonly have an address on them, but it’s not a requirement. If you are using a check without an address, the business or service you are playing may require some additional ID or info.


SoFi members with direct deposit can earn up to 1.25% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 0.70% APY on all account balances in their Checking and Savings accounts (including Vaults). Interest rates are variable and subject to change at any time. Rate of 1.25% APY is current as of 4/5/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Guide to Duplicate Checks

Guide to Duplicate Checks

Because check writing is a less popular form of payment these days, it’s easy to get confused about how the whole process works. When someone writes a paper check, there may be a carbon copy attached to the back of each check. These are known as duplicate checks.

But what exactly are duplicate checks? How do you use them, and when do you need them? Keep reading for more insight, including:

•   What are duplicate checks?

•   Where can you get duplicate checks?

•   Pros and cons of duplicate checks.

•   Alternatives to duplicate checks.

What Are Duplicate Checks?

So exactly what are duplicate checks? If you have ordered these, when you get a checkbook from your bank, you’ll see that attached to the back of each check is a thinner piece of paper known as a duplicate check.

When you write on a check to fill it out, your writing copies over to the duplicate check. In this way, the duplicate that is created can act as a record of the payment made, how much was spent, the day the check was written, and to whom the check was given.

The same information found on the duplicate check should appear in the consumer’s online account, but it can be helpful to have duplicate checks on hand to quickly reference.

How Do Duplicate Checks Work?

What is a duplicate check and how does one work? A duplicate check is attached to the bank of a normal check in the form of a thin piece of paper. This acts as a carbon copy of the original check (also known as the single check). All duplicate checks have the same check number printed on them as the original. The pressure from the check writer’s pen transfers what is written on the original check to the duplicate check.

Once you are done writing a check, you only pull the original check out of your checkbook and leave the duplicate check in the checkbook so you can reference it when and if you need to. (The original check goes to the person or business you are paying, so they can deposit it, cash it, or sign it over to someone else.) All of the information included in the payee, amount, date, and memo sections transfer over. The one area of the original check that doesn’t copy over is usually the signature. This is to protect you, the account holder, from identity theft in the event someone steals your checkbook. Basically, a duplicate check mirrors the information and can help you verify the check you just wrote. You can see all the details right there, on the carbon copy.

Are Duplicate Checks Legal?

Yes, duplicate checks are legal and simply serve as a record of a check that the account holder already wrote. Where legal issues arise is if someone were to steal a checkbook and try to use a duplicate check to gather the information they need to commit theft or bank fraud.

Where Can I Get Duplicate Checks?

If you have a checkbook, you may already have duplicate checks on hand. If not, you can order this style of checkbook from the bank or credit union where you have a checking account. It can also be possible to order checks from select reputable online check printers who may charge less than a bank does for checks.

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Single vs Duplicate Checks: What’s the Difference?

Single checks look exactly the same as duplicate checks (although the signature doesn’t transfer over to the duplicate check). The same check number is even on both checks. The main difference between single checks and duplicate checks is the thickness of the paper and that the duplicate check acts as a carbon copy of the single check.

Sometimes, a person may refer to single checks as the kind of checks that don’t have the duplicate behind them. In this case, a single check would be a “regular” check that arrived in a checkbook with no copies involved.

Pros of Duplicate Checks

Once the principle of a duplicate check is understood, you may wonder if these are right for you. Here are a few advantages of using duplicate checks.

Safer than Carrying Cash

While someone can easily steal cash out of a wallet, checks are not as simple to steal. This is especially true if you take steps to manage your checkbook well and keep it in a secure place.

Ease of Use

You don’t have to do anything to create the duplicate check thanks to the carbon copy function. No writing the check number, date, payee, and amount in your check register (unless, of course, you want to do so).

Convenience

The whole point of a duplicate check is to make staying organized and tracking former check payments easier. While most check information is available through online bank accounts, having a paper copy can act as a helpful backup.

Checks Can Be Canceled If Stolen

If you have reason to suspect a check was stolen, you can stop payment on the check before it is cashed. Again, that’s a big advantage over cash; once bills are stolen, they are gone.

Cons of Duplicate Checks

Of course, there are also some disadvantages associated with duplicate checks worth keeping in mind.

Security and Privacy Risk

Because duplicate checks have important information on them about your bank and your spending habits, it’s important not to lose a check and minimize the possibility of your checkbook getting stolen.

Cost More Than Regular Checks

Some banks or check providers charge more for duplicate checks than they do single checks.

Will Not Work Where Places Automatically Print Checks

Duplicate checks may not be easily available from all vendors. Not all check providers can create duplicate checks.

Checks Becoming More Increasingly Uncommon

Checks (including travelers checks) are becoming a less popular form of payment as people shift to online payments, electronic checks, and other options. In many cases, it may not be worth the fuss or ordering and managing a checkbook for the occasional payment.

Alternatives to Duplicate Checks

If you want to keep good records of checks you have written but don’t want to hold onto duplicate checks, you have a few options for how to proceed.

•   Log in to an online bank account. Most banks and credit unions give customers an online bank account where you can access information about recent transactions including the information one would find on a duplicate check. A warning: This is not a reliable way to keep track of every check ever written as banks eventually stop sharing old transactions. But it is possible to download these statements and save them electronically.

•   Make a digital copy. You can take a picture of or scan each check you write and store them digitally.

•   Use a check register. To keep all information about written checks in one place, it’s possible to use a check register. These registers can be on paper or can be digital; they capture the check number, payee, when a check was written and for how much. This process can make it easy to balance, say, your high-yield checking account by copying down check-payment information and subtracting the amounts from your balance.

The Takeaway

What is a duplicate check? In short, a duplicate check is a carbon copy of a single check. Though it can’t be used to make a payment, a duplicate check makes record-keeping easier. When you write a single check, the attached duplicate check creates an automatic copy of the check that you can easily reference. While checks are in many cases losing favor, a duplicate check system can be a bonus for those who do like writing checks, as it can make keeping tabs on your account that much easier.

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FAQ

What is a single check?

A single check is the original check that the account holder writes on and gives to someone they want to make a payment to. What are duplicate checks? They are a thinner piece of paper that may be attached to the back of a single check and can act as a carbon copy of it.

What is the difference between a single and duplicate check?

For the most part, single checks and duplicate checks look the same. The main difference is that a duplicate check is a thinner piece of paper and that the signature doesn’t usually copy over from the single check to the duplicate check.

Can you cash a duplicate check?

No, it’s not possible to cash a duplicate check. Only single checks can be cashed. The duplicate check simply serves as a record of the single check.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi members with direct deposit can earn up to 1.25% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 0.70% APY on all account balances in their Checking and Savings accounts (including Vaults). Interest rates are variable and subject to change at any time. Rate of 1.25% APY is current as of 4/5/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

Photo credit: iStock/FG Trade
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What to Do if There Is a Bank Error in Your Favor

What to Do When There Is a Bank Error Made in Your Favor

If you ever see a bank error made in your favor, you might think, “Free money!” but the truth is, you need to report the error ASAP.

An unfortunate fact of life is that people — and sometimes technology — can make mistakes. Every once in a while, your bank might make an error and deposit cash into your account that wasn’t meant for you. A teller at a bank branch could have entered the wrong digit in an account number as a customer tried to deposit a check or transfer funds, for example. Whatever the reason, you’ll notice that your bank account balance is higher than it ought to be.

While this may seem like a cash windfall and you might be tempted to keep the money, you should report the error to your bank as soon as you notice it. That way, the mistake can be corrected as quickly as possible.

Let’s take a closer look at this scenario and answer these questions:

•  Can I keep money from a bank error?

•  Is there a penalty if I keep money from a bank error?

•  How and when should I report the error?

Can I Keep the Money from a Bank Error in My Favor?

So what happens when money is accidentally deposited into your account? You may wonder if it’s a case of “finders, keepers.” Well, the only time that you can keep funds added to your account is when the money deposited was legitimately meant for you.

When a bank error occurs in your favor, you cannot keep the money — even if the error seems small and likely to fly under the radar. The money isn’t legally yours, so you must return it.

What’s more, the customer whose money accidentally landed in your account will probably notice the mistake and ask the bank to track down the money. Or, the bank will catch the mistake in one of the regular audits that it makes on accounts and withdraw the money again. If the money isn’t in your account, they may ask you why you didn’t report the mistake earlier.

Recommended: Ways to Deposit Money into a Bank Account

What Is the Penalty for Attempting to Spend or Keep the Money?

Now, let’s consider what would happen if you didn’t report and return the money mistakenly put in your account. Even if you are a person who doesn’t pay much attention to your banking details and assume the money is yours, it is still a big problem if you use it. If you spend the money from a bank error in your favor, move it to another account, invest it, or give it away, you could wind up in a lot of hot water.

Failing to return the money may be tantamount to theft, and you could face criminal charges, such as theft of property lost by mistake or receiving stolen property. Criminal charges may be made to get a court order to force you to repay the amount, and in some cases, you could end up with probation or prison time. That’s a very good reason to get the funds back to your bank as soon as you realize there’s been an error.

A few years ago, a Pennsylvania couple went on a spending spree when their bank accidentally deposited $120,000 in their account instead of a business’ account due to a teller error. The couple bought various vehicles with the money and also gave $15,000 away to friends in need.

The bank requested that the couple return the money and then reversed the transfer, causing an overdraft on the couple’s account of over $100,000. The couple was eventually convicted of theft, sentenced to seven years’ probation, 100 hours of community service, and ordered to repay the money they stole. Surely, this is a good example of why there’s no such thing as free money in this situation.

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When Should I Report the Error?

If you discover money in your account and can’t explain where it came from, contact your bank right away, and ask them to figure out the origins of the funds. If it turns out the money really was for you — perhaps a relative deposited it in your account as a gift, for example — your bank will let you know that you are free to access the funds and use them for whatever you’d like.

If the funds weren’t originally meant for you, the bank can start the process of reversing the transaction.

To report the error, first call your bank. Take down the name of the person you talked to and make a note of the time and date. Follow up your call with an email that outlines the details of the error. That way, you’ll have a paper trail of your attempts to correct the issue. The time frame in which to report a bank error varies, so check with your particular account’s fine print to know the specifics.

What Happens if the Bank Does Not Respond?

Generally speaking, banks have 10 days to complete an investigation into an account error. But it is possible the investigation could take as long as 45 days. You can take a look at your deposit account agreement to find out how long it should take your bank.

If nothing has changed after that period of time, contact your bank again to check in on the progress of the investigation. Do not assume the money has somehow become rightfully yours. You don’t want to make a bad situation worse, cause legal action, and wind up eventually having to hire a lawyer to represent you.

What Should I Do So That I Don’t Get in Trouble?

When an erroneous deposit is made to your account, here are the steps you should take to help ensure that you don’t get into any trouble.

Do Not Touch or Transfer Money

First things first, if you notice money in your account that’s not yours, don’t touch it. Don’t spend, don’t give it to someone else, and don’t move it into a different account. Don’t even spend the money if you plan to repay it and report the mistake later. Anything you do to tamper with the money, no matter how benign it seems, could have big consequences later.

Contact Your Bank

As we mentioned above, contact your bank immediately when you notice the error, and keep records of your interactions.

Monitor Your Account

Get in the habit of scoping out your financial accounts regularly, whether it’s checking your credit report, bank account, or even checking medical bills for errors. The fact that even your bank can accidentally deposit money into your account illustrates the necessity of reviewing your bank account regularly.

If you don’t look at your account statement frequently, you may not notice small errors, and these can have a big impact on your personal finances. How often should you check your bank account? There’s no precise answer, but between once a week and once a month can be a good place to start.

For example, say a small deposit of just a few hundred dollars is accidentally made to your checking account. Say, too, that you don’t notice the deposit and spend some of the funds. When the bank discovers the mistake, they can withdraw the funds without your permission, freeze your account, or put a hold on your funds. If you’re still operating unaware of the erroneous deposit, this can wreak havoc on your account. It could cause overdrafts or your checks to bounce. It might gum up the works on any automated bill pay that you may have set up.

As a result, you may be on the hook for overdraft fees, or you may end up paying some bills late.

Keeping careful tabs on your account can help you catch errors so you can avoid these situations and improve your financial health. Consider setting up alerts for deposits in your account. That way you can spot any mistakes as soon as they happen. You may want to consider other automatic ways to monitor your finances, such as credit score monitoring and card security and protection, to help keep your accounts safe.

The Takeaway

Now you know what to do if money is accidentally deposited into your bank account. If a financial institution makes a mistake in your favor, sorry to say, this isn’t the moment to go on a spending spree. The best thing you can do is act quickly to alert your bank. That way, the error can be corrected, the right person can receive the money they need, and you can continue banking as usual. If you fail to do so, you could wind up with overdrafts and other issues when the bank takes the money back. Worse still, you could face legal consequences with far-reaching effects. So do the right thing, and keep your financial life on the up and up.

Here’s a no-funny-business way to help your money grow: Bank with SoFi. We’re committed to zero account fees as well as superior interest rates. Sign up for our Checking and Savings with direct deposit, and you’ll earn a super competitive 1.25% APY which is 41 times the current national checking account average. Plus, we won’t deduct any monthly, minimum balance, or overdraft fees.

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FAQ

Can I keep money credited in error to me?

No, you cannot keep money that is deposited in your account in error. You should alert your bank and have the funds redirected to their rightful owner.

Do I have to report a bank error?

Yes, you should report the error. Contact your bank and report the mistaken deposit as soon as you notice it so the problem can be corrected.

What happens if the bank makes a mistake? Who is responsible and why?

If your bank makes a mistake, you should alert them as soon as you notice it. Your bank will also run regular audits of your accounts, which can help them catch errors. When they do catch a mistake, it must be resolved with the funds going back to the correct account. To do so, the bank can reverse transfers, withdraw funds from your account, freeze your account, or place a hold on the funds without your permission. If the money isn’t there, you will be asked to repay it, and you may face criminal charges.


Photo credit: iStock/fizkes

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 1.25% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 0.70% APY on all account balances in their Checking and Savings accounts (including Vaults). Interest rates are variable and subject to change at any time. Rate of 1.25% APY is current as of 4/5/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
This article is not intended to be legal advice. Please consult an attorney for advice.
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