Often wrongly called a credit card, this is a card issued by a bank branch to its customers; it guarantees that any cheque, up to the amount stated on the card (e.g. £50), issued by a customer will be honoured by the bank. The person taking the cheque must ensure that the cheque card is not out of date, that the account numbers on the card and cheque are the same, and that the specimen signature on the card corresponds with that on the cheque. Thc number of the card should be written on the reverse of the cheque by the person taking the cheque, not by the person issuing it. Though it is common practice for thc latter to do this it should be noted that, if the bank could prove that this was so, then thc guarantee would be inoperative. One further important point: in so far as the bank becomes responsible for the cheque immediately the number is entered thereon, the person issuing it cannot stop payment as he can with a normal cheque transaction.
|Reference: The Penguin Business Dictionary, 3rd edt.|