Question

Crossed cheque is preferred to a bearer cheque. Why?

Answer 1

When a cheque is crossed, the holder thereof cannot encash it at the counter of the bank. Encashment at the counter of the bank is possible only in the case of an open cheque, i.e. a bearer cheque or an uncrossed cheque.
The holder of a crossed cheque has to present the same to his bank for collecting its amount from the drawee bank. When the amount of the cheque is collected, the account of the holder is credited. Thus, it is possible to trace the party receiving the amount of the cheque. This is not so in the case of a bearer cheque because a bearer cheque can be encashed by anybody who presents it at the counter of the bank. Crossing, therefore, gives protection against payment of a cheque to wrong parties.


A holder of a crossed cheque should either have a bank account in his own name or should get the cheque encashed through a relative or friend having an account in some bank, by endorsing it in his favour. In either case the payee can be traced.


Thus, a crossed cheque is always safer than a bearer cheque.

Answer 2

Crossed Cheque : When you go to bank with a crossed cheque, bankers won't discount the cheque and give the cash to your hand. They will directly transfer the amount to your bank account.  Bearer Cheque: When you go to bank with a bearer cheque, you will be given cash. So, here there is a scope for misuse of the cheque.Whomever gets a bearer cheque can discount the cheque and take the money. So, crossed cheque is always preferred to bearer cheque.