Last updated 14 January 2019

A bank cheque is a cheque drawn by a bank. When the cheque is presented, the funds are taken from the bank’s account and not from a customer’s account. Banks usually do not issue bank cheques unless they have first received the equivalent in cash from the customer.

Like a personal cheque, a bank cheque shows the amount of the cheque and the name of the payee on the front of the cheque. The words ‘bank cheque’ also appear on bank cheques issued by most Australian banks.

Sellers in the past readily accepted bank cheques as a virtual guarantee that funds are available to meet the purchase price of property.

A person doubtful about the credit rating of a person with whom they are dealing with may wish to be paid direct debit or, failing that, by bank cheque.

Will the bank always pay a bank cheque?

Banks will not always pay on a bank cheque. Payment will not be made if the cheque has been:

  • lost
  • stolen
  • forged
  • materially altered (e.g. alterations to the name of the payee and the amount of the cheque)
  • subject to a court order prohibiting the bank from paying out on the bank cheque.

What this means is that a bank cheque is not the same as cash. A bank cheque is marked ‘Not Negotiable’, which means that, unlike cash, if a person steals the cheque and gives it to someone else in exchange for something of value, the person who receives the cheque is not entitled to keep the proceeds of the cheque even when they are unaware that the cheque was stolen.

Problems with cheques

If a customer has a problem with a cheque, they should contact their bank. If the bank does not resolve the problem, they can complain to the Australian Financial Complaints Authority.