paper checks http://www.wisebread.com/taxonomy/term/12762/all en-US Paper Checks: Going, Going...Gone? http://www.wisebread.com/paper-checks-going-goinggone <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/paper-checks-going-goinggone" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/6583248723_e41da89351_z.jpg" alt="writing check" title="writing check" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>Many Americans still retain a checking account for the purpose of writing actual paper checks. Consumers continue to use paper checks out of habit, convenience, security, or having no other option with a vendor. But there are big changes on the horizon that may cancel the use of personal checks or paper checks in general. Are you ready to go paperless? (See also:&nbsp;<a href="http://www.wisebread.com/why-i-still-write-paper-checks">Why I Still Write Paper Checks</a>)</p> <h2>Who&rsquo;s Changing and Why?</h2> <p>Many creditors, lenders, utility services, and even federal and state government agencies are shying away from issuing or receiving paper checks. For instance, those who receive child support payments now do so through a debit card and direct deposits. Banks and other vendors are offering incentives for customers to go electronic. Paper statements and paper checks are becoming a thing of the past.</p> <p>The move to electronic payments and direct deposits essentially all comes down to the cost factor. In order to save money and cut expenses, state and federal agencies especially are making the switch. There is more cooperation between banks and government agencies to keep programs moving forward and organized.</p> <p>While some feel the move is not such a great idea, there are benefits for both sides. Vendors benefit because their overhead is lowered. For consumers, the receipt of child support payments or unemployment benefits is seamless. No more waiting for the mailman or worrying over lost or stolen checks. Payments are now being made via direct deposit onto a debit card issued by the agency responsible for payment. For each payment, cards are reloaded automatically.</p> <h2>What to Watch For</h2> <p>While cost and convenience are certainly pluses to both vendors and consumers, this changes the rules. Without understanding the changes, consumers will likely end up making mistakes that will cost them cash because they didn&rsquo;t know any better. Here are some essential things you need to know about going electronic:</p> <h3>Unexpected Fees</h3> <p>Most governmental agencies do not charge a fee for money being reloaded onto a card. This may be the case now but not always. In the case where you receive a refund or a <a href="http://www.wisebread.com/are-rebates-worthy-of-you">rebate</a> from a retail store or other entity, funds issued through a debit/credit card may not be fee-free. You may have to pay fees for each transaction you make or for reloading a card with new funds. There may also be additional fees for use at an ATM or for maintaining an inactive card. Check with the terms and conditions of the card in refund situations. It may be better to ask for a store credit rather than getting stuck with fees and losing your access to the full amount you are owed.</p> <h3>Balance Checks</h3> <p>With some cards you may incur a fee for using your card in any capacity at an ATM, including for a simple balance transfer. Find out if you are going to be charged for balance checks done over the phone or the Internet. If fees are incurred, it would be smart to keep tabs on your expenditures on a piece of paper rather than lose cash to a series of fees. This is also key because if you go over the amount of funds on the card when making a purchase, your card will either be declined or you&rsquo;ll be hit with a pretty significant overdraft fee for each transaction you make over your limit. Not only will you be out of funds, you&rsquo;ll be responsible for paying the overage charges.</p> <h3>Keeping Your Card Safe</h3> <p>While a plastic card may be much more convenient than a paper check, there is still a risk of having it stolen or losing it. A lost card may cost you up to $25 to replace, so make sure you keep your card in a safe place at all times. Not only do you face fees, you&rsquo;ll also lose access to your funds during the processing time.</p> <h3>Online Security</h3> <p>If you are making payments to vendors such as your utility companies, mortgage lenders, or loan providers, be very careful about your online security measures. While most <a href="http://www.wisebread.com/think-twice-before-ditching-your-current-bank">banks</a> and legitimate vendors will have established a thoroughly secure system for accepting payments online, you must make sure your own computer is safe. It is not advisable to store passwords online or on your mobile phone because of the potential for identity theft.</p> <h3>Card Rules</h3> <p>Federal assistance programs and refunds issued through debit cards may also come with special use rules that you need to understand. There may be limitations to what you can use the card for, and you need to be prepared to follow such rules. For instance, government programs such as food assistance programs will only allow for certain purchases to be made on the card. You may also only be able to use your card for a certain amount of transactions within a month&rsquo;s time period.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tisha-tolar">Tisha Tolar</a> of <a href="http://www.wisebread.com/paper-checks-going-goinggone">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-i-still-write-paper-checks">Why I Still Write Paper Checks</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-reasons-to-love-your-bank">6 Reasons to Love Your Bank</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/credit-cards-vs-debit-cards-a-comprehensive-comparison">Credit Cards vs. Debit Cards: A Comprehensive Comparison</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-set-up-automatic-payments">How to Set Up Automatic Payments</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-beat-debit-card-fees">4 Ways to Beat Debit Card Fees</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking debit cards online banking paper checks Fri, 14 Jan 2011 13:00:12 +0000 Tisha Tolar 454928 at http://www.wisebread.com Why I Still Write Paper Checks http://www.wisebread.com/why-i-still-write-paper-checks <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-i-still-write-paper-checks" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/2204277278_cbf43f4146_z.jpg" alt="writing check" title="writing check" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>I know plenty of people who write essentially no paper checks any more. I know students who pay everything with debit cards. Others manage their financial lives with electronic payments. I do neither. I get by with a mix of <a href="http://www.wisebread.com/carry-some-cash">cash</a>, credit cards, and paper checks.</p> <p>Now it's really just a matter of inertia. I used to have some reasons for doing things this way, but they've all been superseded by events:</p> <h2>Float</h2> <p>It used to be that writing checks produced float &mdash; the time between you handing over your check and your bank debiting your account. Back in the early 1980s, when interest rates spiked up over 14% and paper checks had to be flown back and forth across the country to be presented at your bank for payment, float was a big deal. (See also: <a title="Avoid Bank Fees" href="http://www.wisebread.com/avoid-bank-fees">Avoid Bank Fees</a>)</p> <p>Even for ordinary people it could be a big deal. Let's say your mortgage payment was $1,000. If you had your mortgage at an east-coast bank and you paid it with a check drawn on your west-coast money market fund, it could easily take five business days for your check to clear. At 14%, you'd be earning 38 cents a day, so the float could make you $1.92 (even $2.68 when the weekend lined up right and you got seven days of float). That's $2 a month of free money, just from the float on one bill! Multiplied across all your bills and twelve months a year, float could easily add up to $100 a year.</p> <p>For businesses, it was a much bigger deal. If could increase your float by one day, you could add $140,000 straight to your bottom line for each $1 million worth of payments you made per day. There were consulting firms to help you locate the right bank for your checking account (that is, the bank that was most remote from whoever you made payments to).</p> <p>Nowadays, of course, it makes little difference. Between <a href="http://en.wikipedia.org/wiki/Check_21_Act">Check 21</a> and the various kinds of <a href="http://en.wikipedia.org/wiki/Automated_Clearing_House">Automated Clearing House</a>&nbsp;(ACH) check truncation, checks usually clear almost immediately. You're lucky to get two days of float. Plus, interest rates are near zero, so there's really no point.</p> <h2>Security</h2> <p>There was a time, long ago, when the only way to get money out of a checking account was to present a check for payment. Even the account holder did it that way: He came in to the bank with a check made out to &quot;Cash&quot; and presented it for payment.</p> <p>Those were the good ol' days. The only way a thief could steal money from your account was to forge a check &mdash; either modify a real check or else print checks with your account number and then forge your signature on them. Checks were printed on &quot;safety paper&quot; to make such forgeries more difficult to do and easier to detect.</p> <p>You got the actual paper check returned to you after the bank had paid it &mdash; with the word &quot;Paid&quot; stamped across the front. That served as proof of payment. If the check was a forgery, you had the evidence. (It was also kind of interesting, because you could see all the endorsements on the back. You could tell if someone had just deposited the check into their own account or signed it over to someone else. You could also see all the banks it had passed through on its way to your bank.)</p> <p>For a time, when ACH debits were just starting to take off, I made a point of never authorizing an automatic debit to my account. I figured it would make it easier to deal with a theft of that sort &mdash; I wouldn't have to argue about whether a particular transaction was or was not authorized, because I could just make a blanket statement: No automatic debits were authorized.</p> <p>Nowadays, of course, practically every transaction that hits your checking account is an automatic debit of some sort &mdash; even the ones that you initiate by writing a paper check. There's no way to prevent it; if you could, it would just make your checking account worthless.</p> <h2>Errors, and Fixing Them</h2> <p>I was actually an early adopter of electronic banking back in the early 1980s. There wasn't an &quot;automated clearing house&quot; in those days. Any kind of automated payment needed to be negotiated individually by your bank and whoever you were trying to pay. The same was true of direct deposits.</p> <p>I ran into a number of errors in those days, including a direct deposit failure that delayed my paycheck for several days. My roommate at the time had a mortgage payment go similarly astray, causing more than a little stress. Perhaps it was a reaction to those early errors that prompted me to just stick with paper checks.</p> <p>Nowadays the automatic systems are probably more reliable than the paper systems, and there are actually pretty good rules to protect you from errors and unauthorized transactions (although only if you <a href="http://www.wisebread.com/check-your-statements ">check your statement</a> and tell the bank if there are any).</p> <h2>I'm Not the Only Luddite</h2> <p>I suppose there are plenty of other people who still write paper checks out of simple inertia. But there's one group that has a real financial interest in paper checks: the companies that print checks. One of them, Deluxe Corporation, has started an ad campaign called &quot;Stand Up for Your Right to Write Checks,&quot; complete with a mildly amusing video:</p> <object width="560" height="340"> <param value="http://www.youtube.com/v/fG3luLjg74Y?fs=1&amp;hl=en_US" name="movie" /> <param value="true" name="allowFullScreen" /> <param value="always" name="allowscriptaccess" /><embed width="560" height="340" allowfullscreen="true" allowscriptaccess="always" type="application/x-shockwave-flash" src="http://www.youtube.com/v/fG3luLjg74Y?fs=1&amp;hl=en_US"></embed></object><p>The video shows someone paying with a check at a convenience store counter. Even I don't try to do that any more. I did continue to write checks at the grocery store long after I'd quit using them at other stores, but I finally switched to credit cards about three years ago. (I long ago quit carrying a checkbook around with me, because the only place I ever write checks any more is at my desk.)</p> <p>Still, the general message &mdash; that the payer ought to have the choice of how he pays &mdash; is one that resonates with me. Any business that sends me a bill is going to get paid by check. If they can't deal with that, they're not going to get my business.</p> <p><em>How about you guys? Anybody else out there still paying their bills with paper checks?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/why-i-still-write-paper-checks">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/paper-checks-going-goinggone">Paper Checks: Going, Going...Gone?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/credit-cards-vs-debit-cards-a-comprehensive-comparison">Credit Cards vs. Debit Cards: A Comprehensive Comparison</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-live-bank-free">5 Ways to Live Bank-Free</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/save-more-by-avoiding-multiple-bank-accounts">Save More by Avoiding Multiple Bank Accounts</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-annoying-bank-fees-and-how-to-avoid-them">12 Annoying Bank Fees and How to Avoid Them</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking bank accounts check writing checkbook debit cards paper checks Mon, 29 Nov 2010 13:00:08 +0000 Philip Brewer 327860 at http://www.wisebread.com