Until about five years ago, I used to carry my checkbook everywhere. In fact, some of my purses even had a special compartment that provided easy access to my oft-used pad of checks. Nowadays, however, I leave my checkbook at home. In fact, I can’t remember the last time I wrote a paper check.
This change in consumer behavior is the result of several factors, including the introduction of more convenient payment methods, the growth in online shopping, concerns about fraud and identity theft, and a desire to avoid bounced check fees. For many people, it is faster and simpler to swipe a debit or credit card than it is to write out a check while shopping at brick and mortar establishments. Many online merchants only accept credit and debit cards. Online bill payment services make sending payments easier by automating the process.
Security is another reason for the decline in use of paper checks. If a checkbook is lost or stolen, victims might face a nightmare of trying to undo the damage. Additionally, personal checks often contain a wealth of personal and banking information for identity thieves and other scammers. Since money is not withdrawn immediately from a bank account when someone writes a paper check, bouncing checks (and paying high fees) becomes more of a concern.
However, in spite of all this, there are a few compelling reasons not to ditch your checkbook entirely.
Why You Still Need Paper Checks
Sometimes it makes more sense (or is your only choice) to use a paper check instead of another means of payment. Here are several ways checks can be more convenient, save you money, or protect your finances:
- Some Businesses Charge Extra Fees for Credit Card Payments. Utility companies and government agencies may accept credit or debit cards, but only through third-party processors. These payment processors charge a fee every time you use a credit card to make a payment.
- You Can Pay During Utility Outages. Stores rely on electronic equipment to process debit and credit card transactions. If the power or phone systems are down in your area, checks and cash are likely to be the only way you’ll be able to make a purchase. Since the ATMs are also likely to be out of service, a paper check may be the only way that you can buy food and other necessary supplies for you and your family.
- Some Businesses Prefer Paper Checks or Money Orders. As strange as it may seem, some businesses don’t accept credit or debit card payments. These businesses include insurance agents and companies, some government offices, tradespeople, organizations (such as churches, fraternal lodges, and community groups) that charge dues or accept donations, and landlords. You may also occasionally encounter an old-fashioned retail business owner who abhors plastic but who is happy to take your check.
- Some Retail Shops Enforce a Minimum Credit Card Purchase. Credit card processors and banks charge businesses a fee when customers pay with a credit card. This fee can take a big bite out of small purchases, so many businesses set a minimum amount for credit card purchases. If you don’t have another form of payment, this could result in you wasting money on an item you don’t need in order to meet the minimum. There’s no fee to deposit a check, so there’s generally no minimum purchase required.
- Checks are Traceable. If traceability is important to you and the payee doesn’t accept debit or credit cards, paper checks offer a level of traceability that you can’t get from money orders, cashier’s checks, automatic bill pay systems, or cash. When you mail someone a paper check, you can select the type of mail service that you want to use, along with a tracking method. (Being able to document the mailing date of a payment can be important with some types of payments, such as insurance premiums or taxes.) Once your check clears, you’ll have access to a copy of the canceled check through your bank. If there is any dispute over your payment, you can easily produce your mailing receipt and provide the business or creditor with a copy of your canceled check. If you paid with a money order, particularly a non-bank money order, tracing the payment can be costly and time-consuming.
- Gift Giving. Gift recipients can deposit your check into their bank accounts and spend the cash however they like, unlike gift cards, which may be restricted to a merchant, can only be used at merchants that accept a particular credit card brand, or charge fees for maintenance or cash withdrawals at an ATM.
- Checks Are Less Costly Than Money Orders. My bank charges five dollars for a money order. Even postal money orders cost over a dollar each, more if issued in international currency. Non-bank money orders often cost less, but their issuers may charge high tracing or replacement fees if the money order is lost or destroyed. Of course, there are circumstances where money orders are more appropriate, such as when a payee asks for guaranteed funds or you need to complete a financial transaction quickly without waiting for a check to clear.
Protecting Yourself When Using Paper Checks
If you do use paper checks, it’s important to guard against financial and identity theft. Here are some tips:
- Guard Your Checks. Keep your paper checks in a safe place at home. While it’s understandable that you’d want to keep your checkbook handy for paying bills, you should still keep it in a safe space, such as a locked desk drawer. Ditto for boxes of extra checks. It’s also a good idea to write down the lowest and highest check numbers on the supply of checks that you have at home. Keep this information in a safe place: If your home is robbed, you’ll want to check your check supply to make sure that the thieves didn’t make off with your checks.
- Record Your Check Use. Record every check you write in your checkbook register. Some check printers provide duplicate check pads that leave you with a carbon copy of each check you write.
- Only Use Checks When Necessary. When possible, use cash, plastic or electronic payment systems to pay bills or for purchases. Even if a business owner is completely honorable, an employee or thief may get a hold of your check and use it to steal your identity or money.
- Securely Mail Your Checks. If you make check payments by mail, never leave them for your mailman in an unlocked mailbox or in your office’s “outgoing mail” basket. Place the envelope containing your check in a postal service mailbox, or bring it directly to the post office.
- Be Cautious About What You Print or Write on Your Checks. Don’t write your life story on your checks. Your check should contain your name, address, and nothing more. Only write your phone number or driver’s license number on your check if a merchant asks for this information. More information makes it easier for identity thieves to impersonate and harm you.
- Protect Checking Account Information. Be careful about giving out checking account information. If you aren’t well acquainted with a business – particularly if it operates primarily online – be wary about making payments through electronic checking account debit.
- Check Your Account Transactions Daily. Just looking at your bank balance isn’t enough. Check your transactions daily. If you don’t recognize a transaction, no matter how small, contact your bank.
- Don’t Write a Check if You Don’t Have the Funds. Last but not least, don’t forget what you learned when you opened your first checking account. Never write a check if you don’t have the funds for it in your account. Not only are you opening yourself up to bounced check fees, but writing a bad check is illegal in many states.
Paper checks still have a role in personal finance management, so don’t forget how to use them properly. Protect your personal information by restricting the information that you include on a check. Finally, evaluate your payment options before paying a bill or making a purchase so that you can choose the payment method that makes the most sense.
Do you still carry a checkbook? Do you write checks often?