You may believe writing checks is a thing of the past. Some day they most likely will go away completely – they already are in some European countries. Even in America, a lot of retail and B2B establishments use POP , ARC or ACH transactions today to electronically process your check. Use of online bill paying, electronic wallets and debit cards can be so convenient that you wonder why you would ever want to write another check. Writing a check takes time, buying checks costs money. Mailing checks to pay bills costs postage. Why bother?
Here are 12 reasons to use checks instead of the alternative.
1) You have a record of your expenditure.
Most checks now have a carbon, as you write the check you are making a copy of it. Most folks who use checks also write the check payee, date, check number and amount in the check register. Using a debit or credit card may not result in as consistent a record.
You also have (or can get) a paper copy of your check for proof of payment (just in case the IRS comes calling).
2) You tend to be more aware of available funds.
Since you are keeping a record of what you are spending, you tend to know more about how much is left in your account.
3) You don’t have a transaction processing fee.
On most checking accounts you won’t have any kind of transaction fee (unless you have an account where you can only do so many transactions each month), whereas your debit card can generate a fee for you if you aren’t in network.
4) You tend to spend less.
If you have to go to the trouble of writing out a check and recording what you spent and subtracting that amount from your balance, you may be able to keep better track of your spending than if you just swipe your debit card and forget about the transaction until you get your statement or check your balance.
5) You control the timing of money coming out of your checking account.
With automatic bill pay, once you set the date, you are locked into it. If you have some other major expense that month and need to postpone the bill payment, it is more difficult.
6) The business or person you are paying won’t have a transaction fee.
Financial institutions don’t (yet) charge the retailer to process checks. With both credit and debit transactions, the person you pay is charged a fee – which is passed along to all of us in the form of higher prices.
7) You don’t need electricity or the internet to pay your bill.
You don’t need to sign onto a computer to set up bill pay and you don’t need to get on the internet to check your balance on the bank site.
8.) You don’t have so many entanglements with your bank when you want to switch.
Authorizing automatic bill payment makes it harder to close your account as you have to make sure that all the dust has settled and all bills are paid somehow before closing it.
9) You have fewer chances for overdraft fees if you use checks.
Use of debit cards can cause your account to be overdrawn, depending on whether you use your PIN or not. According to Justin Pritchard in the About article Debit or Credit? Who Pays Interchange Fees?
“If you’ve ever paid for gas at the pump, you know that you swipe your card before pumping gas. The machine doesn’t know how much gas you are going to buy. As a result, it has to take a wild guess. It checks to see if you have at least $50 or $100 available in your account – in other words it authorizes a purchase. If authorization comes back, the retailer “blocks off” that $50 or $100 so you can’t spend it elsewhere.
You might only by $10 worth of gas. Nevertheless, $100 will be blocked off for several days. In a worst case scenario, you’ll end up bouncing checks even though you have the money – it’s just “not available”. This means that if you use your debit card for everyday purchases, you need to be careful. Two ways to protect yourself are:
- Keep extra cash in your checking account
- Use your PIN if you don’t have extra cash in your checking account
Note that using your PIN will make the transaction clear your account more quickly. However, there is a security issue. By entering your PIN number, you run the risk that somebody else will discover it. Thieves (or a hidden camera) may see which numbers you hit on the keypad, or the retailer’s device could give up your PIN – whether on purpose or by accident.
If your PIN is compromised, scammers have direct access to your checking account. This is pretty scary! They can spend that money, or they may even create a fake ATM card to make withdrawals. If they drain your checking account, you won’t be able to pay important bills. Your account may be protected from fraud, but you’ll have to go through some harrowing days or weeks without any money while the issue is resolved.”
10) Some places do not accept debit or credit cards.
My kids were very surprised when we all went out to eat and the restaurant took neither credit nor debit cards. Unless you want to carry large amounts of cash, you may not be able to grab that great bargain at the garage sale.
11) Use of checks is safer and more convenient than using cash.
Although cash is KING, untraceable, and cheap to use and at times can keep you from spending money (it is psychologically harder to spend cash than to use checks, credit or debit!), carrying around a bunch of cash is not too safe. In addition, going to the bank or ATM to draw out the cash is often not convenient.
12) Using checks is a comfortable payment method for many.
Elders (and the rest of us too!) may have trouble understanding the ins and outs of using debit or electronic payments. Many are surprised to discover fees they weren’t expecting. Many have issues trying to remember and record what was spent. Many lose the darn cards and then can’t get to their money. Laws around fees and protection in using debit cards seem to change with frequency.
I still use checks for everyday bill paying – utilities, the weekly trip to the grocery, paying off the credit card and etc. I use credit for payment when travelling, reserving hotels, paying for online purchases or for other purchases when I want more protection than paying cash gives. So far, I have little use for debit cards!
How do you use checks? And how often?
This post has been written by Marie from FamilyMoneyValues.com. Be sure to visit her site if you’ve enjoyed this post.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.