CHEQUE GUARANTEE CARD Meaning and
Definition
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A cheque guarantee card is a type of financial instrument provided by a bank or financial institution to their customers. It is designed to guarantee the payment of a cheque issued by the customer up to a specified amount.
When a customer has a cheque guarantee card, they can use it to guarantee that a cheque they write will be honored by the bank, even if they do not have enough funds in their account at the time of issuing the cheque. The card carries a maximum guarantee limit, typically determined by the bank, which represents the maximum amount the bank will pay for any single cheque.
To utilize the cheque guarantee card, the customer presents it alongside the cheque to the payee. The payee can then feel assured that the cheque will be accepted and cashed by the bank, up to the guaranteed limit, regardless of the customer's current account balance. This provides convenience and confidence for both the customer and the payee in conducting financial transactions.
It is important to note that the cheque guarantee card is distinct from a regular debit card or credit card. It is specifically designed for guaranteeing payments made by cheque rather than facilitating electronic transactions or credit purchases. Additionally, cheque guarantee cards are becoming increasingly less common due to the decline in cheque usage and the emergence of newer payment methods.
