Cheque guarantee card

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Cheque guarantee cards often look like, or are debit cards with the amount of guarantee on the back.

A cheque guarantee card is essentially an abbreviated portable letter of credit granted by a bank to a qualified depositor, providing that when he is paying a business by cheque and the retailer writes the card number on the back of the cheque, the cheque was signed in the retailer's presence, and the retailer verifies the signature on the cheque against the signature on the card, then the cheque cannot be cancelled and payment cannot be refused by the bank. Note that the arrangement works only for cheques drawn on an account serviced by the bank that issued the card.

Cheques drawn against short balances in this manner are usually paid from a line of credit or a credit card account, or from the depositor's savings, or they can result in an overdraft with penalty interest. Cheque guarantee cards are more commonly used in Europe nowadays, but the concept had been a part of the United States consumer banking experience in earlier years, first as a stand alone product and later as a feature combined to a credit card account.

Important to note that the cheque guarantee number is the long number running across the front of the card.