Why I Still Write Paper Checks

By Philip Brewer on 29 November 2010 (Updated 25 November 2011) 32 comments
Photo: CarbonNYC

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 cash, credit cards, and paper checks.

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 I used to have some reasons for doing things this way, but they've all been superseded by events:

Float

It used to be that writing checks produced float — 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: Avoid Bank Fees)

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.

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).

Nowadays, of course, it makes little difference. Between Check 21 and the various kinds of Automated Clearing House (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.

Security

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 "Cash" and presented it for payment.

Those were the good ol' days. The only way a thief could steal money from your account was to forge a check — either modify a real check or else print checks with your account number and then forge your signature on them. Checks were printed on "safety paper" to make such forgeries more difficult to do and easier to detect.

You got the actual paper check returned to you after the bank had paid it — with the word "Paid" 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.)

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 — 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.

Nowadays, of course, practically every transaction that hits your checking account is an automatic debit of some sort — 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.

Errors, and Fixing Them

I was actually an early adopter of electronic banking back in the early 1980s. There wasn't an "automated clearing house" 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.

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.

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 check your statement and tell the bank if there are any).

I'm Not the Only Luddite

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 "Stand Up for Your Right to Write Checks," complete with a mildly amusing video:

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.)

Still, the general message — that the payer ought to have the choice of how he pays — 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.

How about you guys? Anybody else out there still paying their bills with paper checks?

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Julie Rains's picture

I still write some paper checks. The thing I like about ACH is being able to time payments precisely -- partially eliminating the need for float.

Oddly, the reason I didn't adopt "online" banking early was because the promise of banks fell short of my expectations. Basically, in the early days all you could do is initiate a payment rather than manage the entire account (like you can do now).

Much of my comfort level though is derived from the institutions I bank with -- small, locally owned chains rather than a big bank.

Guest's picture
Julie

I think cheques are a bigger thing in the States than they are here in Canada. Here, people are much more likely to use debit cards because we only have the "Big 5" banks (which make up about 85% of the banking industry, as far as I know). I only got a chequebook when I moved into my apartment last year because my landlord (a corporation) is a luddite and doesn't accept direct payments like my utility companies do. I write one cheque a month -- for rent -- and that's pretty much it. If I could get away with doing direct rent payments, I probably wouldn't own a chequebook at all.

Guest's picture
Bobbi

I don't even know where my check book is. I write about 3 checks a year anymore. Everything is automated.
This isn't exactly the same, but I have a friend that has a checking account with BOA. They told her if she continued to get paper statements from them, she would have to pay about $8 per month. She is just not very technical and does not trust the internet to do her online banking. I do not think it is fair for BOA to tell her that. MOST people are already on the electronic wagon, but those that aren't shouldn't HAVE to be. Oh well.

Guest's picture
Rachel Crockett

So float no longer exists.
Written checks are sometimes still recored as automatic debit.
Errors are recorded and fixed in record time by using debit and electronic banking.
And writting checks is a right you can abuse while holding up an obviously long line for a $0.59 beef jerky?!?

Why do you still write checks again?

Philip Brewer's picture

As I said, it's mostly just inertia. I've been writing checks for close on to 35 years now. It's been working fine. Why change? In particular, why should I change my own smoothly functioning processes for someone else's convenience?

Guest's picture
Rez

I pay about 80% of my bills with checks. Only on some of my accounts do I use the electronic payment over the internet. I guess one of the reasons is to also help the USPS. I mean, someone has to mail letters and help keep them in business.

Guest's picture
Guest

If you've got kids in school, there's a lot of reasons to use paper cheques. I'm not comfortable with sending them all with $48 cash each month for bus passes (besides I seldom have any cash). Then there's field trips, school fees, picture day, etc. Between school and rent, I write at least five cheques a month, even though I use debit for all my purchases and online banking for all my bill payments.

Guest's picture
Guest

I'm still writing checks because 1) it makes me examine my bills more closely (I caught my cell company adding extras that I don't think I would have noticed if I had looked online, plus they would have already made the deduction from my account; instead, I demanded a new bill) and 2) I am hoping to keep the US Postal Service in business.

Guest's picture
Guest

This is exactly the same reason I write paper checks. Writing the checks allows me to examine my bills and notice any errors on a monthly basis whereas my electronic debit friends barely even glance at their accounts anymore due to the convenience of having their payments "automatically withdrawn."

I have also noticed certain discrepancies on certain bills that I may not have noticed online AFTER the companies had already withdrew their payment if I had electronic payment. Not the greatest of fun I would like to have when having to call up your bill companies and fight to GET your money back. I would rather PREVENT them from the error before they take their payment by reviewing the bill ahead of time, correcting the issue and then issuing payment.

I also like the USPS and no, electronic payment will not wipe them out of business because you choose not to buy a stamp. Funds from certain stamps (Wildlife/Special Issue) are allocated to some other resource (i.e., Parks/ Natural Resources/ Habitat) of which I am certain most people do partake in and/or enjoy.

Guest's picture
Karen

I was down to writing no checks per month, but now that my landlord is in the same building, I walk that one down the hall rather than setting up an automated check that he gets mailed- it just seems lazy to do otherwise.

I am also the treasurer of my union, and for that I do business 100% by check. I probably write 15 checks a week. I don't want to change the system because the guy that balances the books is older, and I don't want to make things more complicated for him. It also makes it easy for anyone to see everything I've done, since I'm not the only person with authorization to deal with our finances.

Max Wong's picture
Max Wong

I have a check book (with duplicates) for all three of my bank accounts. Yes, I am eleventy years old.

I like writing checks because it helps keep me on budget. It's much easier to overspend with a debit card than it is if you have to write out the whooooole number on the face of the check.

Also, at tax time, I like having the additional paper trail.

Guest's picture
Guest

I just wrote a paper check that I'm going to snail mail tomorrow. I can pay this bill online, but the website is hard to navigate + they charge an additional $2.95 "service fee" for paying online.

Philip Brewer's picture

Yep. I absolutely refuse to pay people to let me pay them.

Guest's picture
Olivia

I prefer checks because they encourage a conscious spending of money. The physical act of slowing down and writing a check makes you more aware of where your money is going. It's much harder to keep current in our budget with credit card transactions. They become abstract slips of paper stuffed in pockets. We don't always remember to list them. But a check with it's register, nags, "don't forget to subtract it from the budget".

Luddites of the world unite!

Guest's picture
Nate

I write maybe 1 check a month and am absolutely annoyed when I do. 3 reasons: Cost, time, and float.

Cost: If you have to mail the darn thing that's 42 cents. Then there is the cost of the replacement checks, the envelope, always needing a pen, etc. Laugh if you want, but if you are going to cite the tiny little benefits of 'float' interest then these costs add up and the material clutters your life.

Time: Handwriting all those fields, making sure they are all correct and legible. Dropping it off to whoever is receiving it. Compared to a few clicks and you are done, it's definitely not a value-added activity.

Float: I don't like float. I don't like having stuff out there in limbo. When I pay it I want it to be reflected in my bank account as soon as possible because that's how I keep track of things. Yes I plan out my expenses and track my debits but I don't want to track a third variable of 'what's out in limbo'. My budgeting and tracking are almost real time and automatic and I can check it at any time and the only times it's not completely accurate is when I know I have a check out there waiting to be cashed.

I've found in my life that eliminating these little annoyances results in time I can spend in actually keeping track and analyzing my activity. I really don't understand forcing yourself to write checks to impede spending. Budgets are actually fun to stick to if they are tracked and updated automatically! It's 2010! Leverage the beautiful tech we have available to get in, get out, and enjoy more of your day.

Philip Brewer's picture

I understand your annoyance with float, even though I came to love it.

There are people (always people, never corporations) that don't seem to get around to depositing their checks. So, every year or two, I'm stuck tracking a outstanding check for two, three, four months, having to deal with my balance and the bank's balance being different. And there really isn't anything you can do about it, except bug the guy to go ahead and deposit the check. (After six months the guy's bank might turn back the check as being stale-dated—but they don't have to. So you have to assume that any check out there might well clear your bank, even after many months.)

When your bank account is earning rates that are measured in hundredths of a percentage point, float is purely an annoyance. But when interest rates are higher, it's kinda nice—despite the book-keeping hassle.

Personally, I find the cost and time to be insignificant. Yes, the pen I use to write checks cost a couple dollars. But the computer I use to manage my finances on-line cost over $1000. (Yes, I'd own the computer anyway—but then, I'd own the pen anyway too.) Yes, it takes a couple of minutes to write a check. But it can take just as long to pay a bill on-line—I don't need to log into my checkbook to write a check.

The real time and effort goes to making sure that you only pay what you actually owe—and that takes the same whether it's on-line or by paper check.

Guest's picture
Nate

You are correct, the costs we are talking about are pretty meaningless. I've been thinking a lot about that lately. The true costs of being frugal vs using that mental energy to have bigger impacts in other areas. Diminishing returns definitely starts to kick in when you try to pinch pennies in anything. Like clipping coupons....yes, if you are good at it then you might save $10 cash per half hour's worth of your time and attention (consider ALL the time and effort that goes into that process, not just the act of clipping and sorting). But could you produce more than $10 if you freed up your time and mind to focus on bigger things for a half hour? That's a balance we all have to meet.

For me, there is a very large energy drain associated with paperwork and little errands. I can understand that for others, logging into a computer represents friction in their life. Ideally, you can find a person to share things with that don't have the same hang-ups and then you can both play to your strengths. Until that time, I have decided to not worry about little costs if it eliminates clutter in my life and mind....If I step back and look at the big picture, I know I'll just end up compensating for those little savings by spending money on something foolish or miss a great opportunity simply because I'm running low on clarity and energy when that moment comes.

EVERYTHING has a cost. Whether its money, time, or mental energy is relative to the spender. If you have big goals in your life, they'll probably take less energy to achieve if you focus more on what value you can create, instead of just what you can save.

Philip Brewer's picture

I'm with you on most of that. In particular, I'll always pick simplicity over frugality if I can possible afford to. I wrote a post on exactly that topic:

http://www.wisebread.com/simplicity-and-being-cheap

Guest's picture
Trish

I still pay some bills by check. The gas and electric company requires a check if
paying over the phone. I use a check every month to pay the HOA fee because
they actually charge extra to withdraw the funds from our account.
Then when my oldest son asks to borrow my debit card and 'forgets' to put it back
in my wallet, I usually carry a check just in case I'm checking out of a store and don't
have it.

Also, need to use checks for the kid's school activities. What makes me crazy is that
it always takes so long for them to put them through.
I like that I can give a check to a relative's children in a card too. I like checks!

Guest's picture
kristine

I write paper checks for all bills. I use a credit card otherwise-it has more consumer protection than a debit card. Debit cars can be processed as credit, no ID check, and have access to all the funds you have in checking. The bank, unlike cc companies, do not have a limit on your liability.

EBT errors are a pain- it is a lot harder to get money back from a company that has taken it directly from your account with permission, than to write a check with the correct amount, and resolve it without being out the money for any period of time.

In the case of an EMP, or internet meltdown, (and the executive branch is trying to get the power to switch off the web in our country during crisis), those with electronic only transactions will have no access to their money, or way to make payments.

I will have a paper trail of paper statements, payment addresses, and paper checks, and be able to go to my brick and mortar bank, checks and statements in hand, and get a bit of money. I will be able to reconstruct all my accounts with much less effort than others.

I teach computers for a living, but a concrete object in hand is a better safeguard than bits of electronic data that are entirely out of your control to protect or retrieve.

And if you want to follow this train of thought further, I recommend reading Wired Magazine's article, by Bill Joy, the Chief Scientist of Sun Mircosystems, "Why the Future Doesn't Need Us." I carefully consider anything I agree to automate, or relinquish personal control over.

In my case, it is not inertia, but thoughtful resistance.

Guest's picture
NMT

Hi Mr. Brewer;
Meet your fellow Luddite. I go to the bank on a weekly basis and write a check for CASH and then have that money for the week. I write a check at the grocery store and pay most of my bills by check. I think that paying cash and to a lesser extent, writing out your checks, recording them, etc.. makes you more aware of the money passing through your hands. Like Duncan Steele, I will fight for my right to write a check! :)
NMT

Guest's picture
NMT

Hi Mr. Brewer;
Meet your fellow Luddite. I go to the bank on a weekly basis and write a check for CASH and then have that money for the week. I write a check at the grocery store and pay most of my bills by check. I think that paying cash and to a lesser extent, writing out your checks, recording them, etc.. makes you more aware of the money passing through your hands. Like Duncan Steele, I will fight for my right to write a check! :)
NMT

Guest's picture
Hannah

I write several checks weekly for the offerings at my church, to support various local charities, and the church's general fund. Other than that, I prefer to pay bills online.

Guest's picture
Meg

OK you never actually said why you still write paper checks - you just exlainied why all the reasons you used to do it are no longer valid! So what gives? You just like spending money on stamps and stationary? You like having to manually balance your checking register to keep track of outstanding checks?

I am forced to write a check each month for 2 HOA bills which don't accept electronic bills and I HATE it. I hate having to remember the due date and address the envelope and buy stamps every 6 months or so and wait the 2-3 weeks it takes for them to cash the darn things after I mail them. I pay in advance every three months to minimize the hassle.

Guest's picture
Guest

I only write cheques to pay Luddites and the elderly.

Philip Brewer's picture

I can't really speak on behalf of all Luddites, but personally I'm very pleased to accept direct deposit.

Guest's picture

Float for the average Joe has never been about interest rates. It is about timing. I need to pay you Tuesday, but the paycheck doesn't land until Friday. Yes, the bank processing is near instant. And yes, merchants that convert checks (WalMart does it at the register) also cut out time, but there are plenty of individuals and small businesses that take days even weeks to deposit the check and some customers even request... "can you hold this until Friday?" So that float is still in use.

Another factor that keeps checks going is the desire to document important transactions. In a recent Fed study I read, the average personal (not business) check transaction is over $400 compared to the average personal debit transaction being around $40. So when it matters, some people choose to write checks.

And finally, while far fewer checks are being written these days, almost everyone writes at least a few checks per year (95% per one study I read.) So almost everyone is still a check writer. Next time someone says they don't write checks anymore, ask the question... "ever?" and you'll often find an "except to my day-care center, except to my hair stylist, except to my landlord...."

Guest's picture
kristine

Public school events may be the last hold-out. Teachers do not want to accept, and are often told not accept, cash for class trips, events, etc. Everyone involved wants a paper trail. And many schools are not even set up to take attendance online, let alone accept online payments with specific event designation. And a lot is being lost in interest as districts can take months to deposit the checks.

Wait a minute! I see a golden opportunity for anyone who has programmed a major ticketing site- create a simple to use online payment app that your typical district assistant can use to set up online bill pay for school events/merch. Pitch it at the state level, and highlight the amount that can be gained in the interest on all these small amounts over a month. They already have it for lunch cards, make it better!

Guest's picture
Guest

i was going to ask about earning interest. I have a free checking account that doesn't earn interest, whatever that is.

Guest's picture
Lala

I still pay all of my bills by check. I don't think I'll ever stop, as I like the time it takes me to focus on the amounts and the bill. My husband and I were victims of identity theft a few years back, and I want a paper trail if something happens again. I don't even own a debit card (credit card is just as fast and offers protection that debit cards can't match).

I also have heard too many stories from friends that do automatic bill pay and had the wrong amounts taken out. One friend had a electronic withdrawal for something like $300 be entered accidentally as $3,000 and it caused insufficient funds penalties and lots of time spent trying to fix... I don't need the headache.

I pay for purchases with cash or a credit card for both convenience and the protection that comes with a credit card, but I pay it off in total each month... by walking into the store and paying with a check (Target Visa can be paid at the service desk for no fee and you can use it everywhere that accepts Visa). I check my statement online and don't receive a paper bill anymore, I just get an email reminder that the statement is up, write out the check and the next time I'm stocking up, I pay the bill as well so I'm not even out any gas since I was going there anyway.

I could see moving to electronic payments on things like utilities, but all of my local ones charge a "convenience fee" anywhere from $5-$30 and I also don't see the point in paying someone to take my money.

Guest's picture
Rich

I get paid by checks since I'm an independent contractor, probably 12-15 a month. I suppose I could get paid by Paypal, but why let them take 3% of my fee just for "convenience"? It's simple to go down to the ATM and deposit a couple checks every week.

I pay my subcontractors by check, as well as the people who run my phones and my rent. The only reason is because I refuse to have Paypal take out a chunk of money from my contractors (and also refuse to add 3% to their invoice to compensate for it). Luddite? I don't think so. Frugal? Sure.

I am eyeing Dwolla as an alternative form of payment, though. 25 cents per transaction sounds pretty darn good. I'll have to get my contractors on it.

Guest's picture

Sticking to a budget works in different ways for different people. And there IS something to be said for having access to a validated (stamped paid) check if you need a copy. Great post!