Final answer:
The three main types of bank transactions are deposits, withdrawals, and transfers. A check is a form of payment that directs a bank to pay a specific amount to a person or entity. Checks offer convenience, security, and ease of tracking expenses.
Step-by-step explanation:
The three main types of bank transactions are deposits, withdrawals, and transfers. A check is a written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or to a specified person.
What are Checks?
Checks serve as a method to pay for goods and services without the need to carry cash. When a person writes a check, the recipient deposits or cashes it at their bank, which then requests the money from the payer's bank. If the payer has sufficient funds, the transaction is processed, and the funds are transferred to the recipient's account. If there are not enough funds, an overdraft occurs, which means the payer's account goes into a negative balance and the payer may incur fees.
Benefits of Using Checks
Checks provide convenience and serve as proof of payment. They also offer safety benefits over carrying large amounts of cash and are useful for tracking expenses. For a business or individual to use a check, they need to have a checking account. The store, or recipient of the check, gets the money by depositing the check in their bank account. They can rely on the Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC) to ensure that the transaction is conducted securely and efficiently.