When was the last time you used a cheque? Not a chequing account (like our No-Fee Chequing Account), but a payment slip from your cheque book?
Payments Canada notes that we most commonly use cheques to pay rent or for person-to-person transactions. We also use cheques for charity donations and gifts.
But cheque usage has declined by 28% from 2019 to 2020. That's a large decrease in one year and part of a much longer drop-off in cheque use in general.
While cheques aren't as common as they once were, they can still be a useful payment method. They're perfect for sharing information for payroll purposes or for recurring payments. However, many people are still confused about voided cheques, as well as the difference between a void cheque and a direct deposit form.
Let's take a closer look at how you might be asked to use a void cheque, the information contained in it, how to read a void cheque, and more.
What Is a Void Cheque?
A void cheque is simply a cheque clearly marked “VOID” across its front. This security measure ensures you can share banking information (your account number, the issuer's financial institution number, etc.) safely. In other words, a voided cheque can't be used, so even if someone got a hold of it, they wouldn't be able to make a payment with your information.
A void cheque is useful for setting up deposit or payment accounts, as well as for arranging automated or recurring payments. For example, it can be used to set up Direct Deposit, where your paycheques are automatically deposited to your account by your employer.
How Do I Void a Cheque?
To void a cheque, write “VOID” prominently in large, clear capital letters across the front of the cheque, covering most of the blank space. Be careful not to write over the routing and account numbers at the bottom, as these should remain intact for verification purposes. Use a permanent marker or pen with blue or black ink to ensure visibility and security.
Every cheque has a number, so it's best to write down the number of the one you've voided, just to know what you've used it for.
By marking the cheque as void without a signature, you stop criminals from accessing your bank account, as they won’t be able to fill in the cheque to cash it or use it for payments.
What Is a Void Cheque Used For?
You’ve already learned that void cheques can help you set up deposit and payment accounts. Let’s dive a bit deeper into their main purposes:
Direct Deposit — Your employer may ask for your payment information to arrange for your paycheque to be automatically deposited into your account (Direct Deposit). A void cheque contains all the deposit information your employer needs.
Recurring Payments — The information on your void cheque can also be used to set up recurring payments. For instance, you can pay your bills or make vehicle financing payments by providing a void cheque. What's more, you can also sign up for different services that will use payments from your bank account on a weekly or monthly basis using the information from your void cheque
Void Cheque vs Direct Deposit Form
Over the years, we've often heard the question, "Is a void cheque and a direct deposit form the same thing?" They are not the same; however, they can be used for the same purpose of setting up bank transfers like paycheques.
It's up to you to decide whether you wish to use a void cheque, or a direct deposit form from your financial institution for this purpose. Still, since these two terms are often compared, we'll clear it up and show you which one is right for you.
The first point to consider is convenience. Any cheque can be voided, but a deposit form needs to be obtained from your credit union or bank. You could, however, easily obtain an electronic deposit form from the website of your financial institution. But a voided cheque is always on hand.
The security of both options is pretty much the same as well. No bank would ever accept a voided cheque, while a form is just as safe. So, should you use a void cheque or direct deposit form? In terms of setting up bank transfers, employers sometimes ask specifically for a voided cheque. However, many employers accept direct deposit forms from banks or credit unions if a cheque is unavailable. So it all depends on what exactly is required of you and your preferences.
Keep in mind that since cheques contain your bank account information, it's better to void cheques that contain any mistakes or that you aren't planning to use. It's safer to simply void it than to keep it blank, and potentially lose it for someone else to find and misuse.
What Information Does a Void Cheque Contain?
Void cheques include your name, address, and branch or advice centre information. Each cheque is also numbered to help you keep better track of your payments.
There are three other important numbers which are always in the following order from left to right at the bottom of a cheque:
Transit number: This five-digit number is tied to your local branch/advice centre or the branch that issues your cheques. A transit number is the same as the branch number on a void cheque.
Financial institution number: This three-digit number identifies your bank or credit union.
Account number: This is the longest number on the bottom of any cheque, although the exact number of digits can change from one institution to another.
The transit number and financial institution number don't uniquely identify you. However, your account number does. While a void cheque doesn't present any danger to your finances, you should still be selective about sharing one. Make sure you trust the person or organization making the request.
What Information Do I Give for Direct Deposits?
To establish recurring payments or receive direct deposits, you'll need to share all three numbers — the transit, financial institution, and account numbers. You will likely also have to share the address of your bank or credit union.
How Do I Get a Void Cheque?
You can easily order cheques from your bank or credit union. But first, you’ll need a chequing account. Choose a free account like our No-Fee Bank Account where you’ll pay no monthly fees and enjoy free and unlimited transactions including debit and Interac e-Transfer®.
A void cheque is a convenient tool for setting up direct deposits or recurring payments, but it’s just one of the many reasons to choose a no-fee chequing account. Open your account in minutes and discover how banking with zero fees can simplify your financial life!