ZIMSEC O Level Commerce Notes: Money and Banking: 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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