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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