In the What If? column Expensive Shoebox, Randall Munroe suggests that the most valuable object that would fit in a shoebox is possibly a check for an arbitrarily large amount. Theoretically, I believe there is no legal limit on the amount of money that can be transferred by check, at least in the US. But I assume that in practice banks have some restrictions on the value of checks they will accept.
So what is the maximum dollar amount of a standard, handwritten personal check (not a cashier’s check or similar), drawn on a personal checking account and deposited in the usual way, that the average US bank will typically honor? If I just bought Rhode Island for one trillion dollars, and want to pay by check, will the transaction go through (assuming the seller accepts the check and I actually have one trillion dollars in my checking account)?
There is no legal upper limit on a personal check, nor any bank imposed limit that I have ever heard of, but praticality usually dictates that very large amounts of money be transferred electronically - wire transfer is the most common method. During my time in banking I saw more than one 7 figure personal check be deposited. I saw wire transfers in the 9 figure range.
So long as the bank makes damn sure the signature and endorsement(s) are valid and puts a hold on the funds until the check clears, they are at virtually zero risk of loss.
It depends on the amount and the history of the account.
Presumably Bill Gates could write a check for $500K and it would be “ho-hum, Bill’s got a new toy” at the bank.
If however, your account is 10 years old and the only checks every run through are mortgage, utility, and trivial retail transactions, and you write one for $10,000 - expect a phone call to the number they have on record for your account. I got one of those calls over a $8000 check to a guy a hundred miles away (pre-web) on a boring household account.
If you do something cute, like change address and phone 2 days before putting through a check 100x the largest ever seen, a good bank shold do a bit more, but I have no idea what. Their contract may have fine print that lets them demand you personally present yourself and confirm, or maybe just flat-out refuse to honor (but the wording had damned well be VERY good to protect themselves if they dishonor a check with sufficient funds - it may be your bail money from Central American hellhole (brought to you by the USMC).
I don’t know what the limit is, but a friend once showed me the check he had written for a million dollars (for purchasing a house). It was a standard handwritten check on a check form from his standard bank checkbook, and it was honored.
Most banks will handle this situation by selectively freeing up funds. Every bank has their own policy, but an example might be: you can withdraw up to $1,000 of the deposit immediately, $5,000 within three days and $10,000 within a week, and the remainder only after it absolutely, without doubt, has cleared the other bank. If the check bounces, they’ll still want their money back, but policies like this mean that they can control their risk a little bit.
Also, if we’re talking millions of dollars, it’s not likely the bank has that much sitting in the cash drawer.
As others have pointed out, though, there’s no real limitation to how large the check can be and have a bank still honor it.
Trivia time: Which 19th century “Robber Baron” was noted for writing “Pay Joe Blow $200” on a scrap of paper, signing it, and it was as good as gold - no banker in town would dishonor it?
Never mind the kind of paper the note was on, how could the banks verify legitimacy? That’s what the whole check business is about. It’s a scrap of paper with the account numbers baked in so you don’t mess them up writing them by hand, and various countermeasures to make it tough to copy.
Since the robber baron is so well known, bank clerks won’t have any trouble figuring out what account to debit - they probably have the numbers memorized. The problem is that the clerks still need to verify the document is authentic before they hand over the money.
Here’s a related question… Say I write you a cheque for $100 million. You deposit it. Unfortunately, my account is a little short that week and the cheque bounces. Two days later, the $100 million is yanked back out of your account and you get charged a fee. Ignoring anything that happens to me, do you get to keep the interest that the $100 million earned in those two days?
Unless it is customary for me to get cheques for hundreds of millions, there is no way in hell I will ever see a cent of it.
Banks can and do hold funds until the cheque (I like that spelling!) is honored by the originating bank.
My bank will do so for 5 days on a suspicious deposit, but I believe (US) regs allow reversal for somewhat longer.
You want a fool’s errand? Find out exactly what makes a check (but not that much) a check? I did programming for banks for 20 years and never was trusted with that OR the contents on the mag stripe on a card.
There was a case years ago of a guy receiving a come-on for some get-rich-quick scheme. Among the bits of paper was a “check” for $90-some MILLION dollars as a “sample of the kind of money you could be making”. He deposited it and held his breath. They didn’t catch it in the allotted time. It was his. Of course the bank did eventually catch on and made very unpleasant noises. It ended with him returning the money with an explanation of “deposited by mistake” and the bank signed a note saying they believed it was a mistake and would hold him harmless.
He make a few bucks on the Inspirational Speaker circuit.
Someone at the bank explained that the document had the NINE markers which make a piece of paper a check.
Name all nine.
The magnetic-ink numbers are largely irrelevant to the question of authenticity. You can have all the magnetic-ink numbers embossed on the cheque form that you like, but if the signature is not the signature of the customer the cheque is a forgery. Conversely, if you have a payment order genuinely signed by the customer, that’s authentic, even if it’s written on the back of a paper napkin.
In most cases, there is no law that says that a cheque has to be written on a preprinted form supplied by the bank. It’s highly convenient for the bank if the customer does use the preprinted form, and in most cases it’s a term of your contract with the bank that if you don’t use that form the bank won’t process the cheque, or reserves the right not to process the cheque, or to charge you an eye-watering fee for processing the cheque. But that’s not so much for security - use of a form that the bank expects to be used does little to prove authenticity - but for convenience - machine-readable account numbers and sorting codes, standard paper size, etc, etc.
Back in the day, before magnetic ink and before account numbers were such a big think and when clerical labour was cheap, preprinted cheques identified the bank but, typically, not the branch or the customer or the account number; the customer wrote these in when he filled out the cheque and, e.g., gentlemen’s clubs would keep a stock of blank cheques from all the principal banks for the convenience of their members. And it wasn’t that uncommon, if there wasn’t a chequebook handy, to write a cheque on your own headed notepaper, or on blank paper. The main issue facing the bank when presented with a cheque was the same in all cases - is this really our customer’s signature? - and while cheques on blank paper might be a bit slower to clear, because they required special handling, it wasn’t a big deal. Certainly as late as the First World War, it was common for officers at the front who had run out of cheque forms to pay debts to one another, mess bills, etc, with cheques written on blank paper or on regimental paper. The cheques cleared without any great fuss.
I remember an episode of Truth or Consequences circa 1960 when a contestant had to cash a check written on a watermelon! I see that Google remembers it also.
Unrelated qustion: When I was young, I think 3rd-party or even 4th-party checks were not unusual. Now they’re uncommon, no?