How do checks work?

Just like cash and credit cards, checks are a way we can pay for goods and services. If you don't know how they work, checks might seem sort of like "free money"... you just write some stuff on a slip of paper and POOF! a payment is made. But in truth, the payment made by a check comes directly out of the checking account belonging to the person who wrote it. Say, for example, that your older cousin Emma has $224.00 in her checking account. When she buys movie tickets, she pays the $18 for the tickets with a check. As soon as she writes the check, Emma has to write down the $18 payment and subtract it from the total in her account so that she know she now only has $206.00. Knowing the balance in the account is important so that when she also writes checks at the grocery store, the gas station, the pharmacy, and the bookstore, she doesn't accidentally write checks for money she doesn't have. If Emma accidentally writes out checks for $210 of more stuff, but she only has $206, her checks will bounce, meaning the payment won't be made. A bounced check is a problem because it usually charges the account holder a fee and is an inconvenience for the person you're paying, too. When the person who receives a check takes it to the bank, the information written on the check tells the bank everything it needs to know: The name of the person receiving the money (payee), the amount being paid, and the account number the money comes from. The check also includes the signature of the person who writes it, so that the bank knows the check is authorized.

(By Mya Kagan)