SIGN UP TO RECEIVE THE LATEST POSTS VIA EMAIL!Stop Using Paper Checks!
March 30, 2008
With the crazy number of reward credit cards out there, why would you use a paper check and receive nothing for the transaction. Personally I use the Amex Blue Cash Card (see post) and get 5% back at Gas Stations, Drugstores and Grocery Stores. I get 1.5% back on everything else. Last year I got around $800 back using my Amex Blue Cash Card for every purchase that accepted credit cards, as well as utility bills and other payments.
If you write checks to have a little “float time” on your purchase, with the use of the new Check21 processing, now the amount of your purchase can be deducted from your account immediately and you don’t even receive the paper check back as paper record of your purchase.
Another reason to drop the checks is have you ever lost your check book? Some banks force you to do a stop payment on each individual check you lost. Those fees can range from $5 – $20 per check, so watch that add up! Plus, most banks still charge you for checks. Why waste the money? Save it!
The only thing I think personal checks are still good for is for payments to people such as piano lessons, giving $50 to your grandson for his birthday, etc. But if you are in the checkout line at a grocery store and are writing a check, you better hope I am not behind you since I will let you have it! At least use a debit card for crying out loud!
If you are still using paper checks and my post hasn’t forced you to rethink switching over to a rewards credit card, please leave a comment and tell me why!
“But if you are in the checkout line at a grocery store and are writing a check, you better hope I am not behind you since I will let you have it!”
Heh. Really? You’d actually scold somebody for buying something with a check? Your time is genuinely *that* precious?
Please get over yourself. It’s a *check*. It takes less than a minute to write. They’re scanned and cleared electronically just as quickly as credit cards are. The “delay” a check-writer causes you is insignificant.
“At least use a debit card for crying out loud!”
Whoops! It’s much, much easier for someone to drain your checking account using your lost/stolen debit card than with a lost/stolen checkbook. Hell, there’s plenty of automated point-of-sale systems that don’t even ask for the billing ZIP code for a transaction like that.
Keep in mind many debit cards function as credit cards, too, so the PIN probably won’t protect someone from a thief.
“If you are still using paper checks and my post hasn’t forced you to rethink switching over to a rewards credit card, please leave a comment and tell me why!”
Alrighty
1) Some service providers (utility company, vehicle registrations/tax assessor’s office), and of course landlords, don’t take credit cards (or worse, they *do* take credit cards but they charge an extra fee). Credit cards are useless here (or are more expensive even if paid on time). Ironically, some credit card companies expect to be paid by check
2) If you’re using paper checks for “float” purposes, you’ve got bigger problems than worrying about dropping/losing your checkbook. The old-fashioned “float” is not a good reason to use a paper check.
3) Not all persons are eligible for reward credit cards.
4) Remarkably few banks actually charge their customers to cancel a box (or a book) of lost/stolen checks.
5) If you’re spending enough to earn $800 a year on a card, it means you’re dropping $16k a year on gas or $53k a year on “other purchases” just on this card. Money getting spent like this would earn more than 1.5% (or even 5%) if it were invested instead of being spent on consumer goods (unless you live in a mansion, your utility and other “bills” surely do not add up to over $10k a year).
As an aside, these credit card providers can afford to pay these minuscule cash back bonuses by charging transaction fees (for the merchants you do business with) and by charging (sometimes excessive) interest and (always excessive) fees. Doubtful this is a bother to you, but the reason American Express is accepted in fewer places than the other credit cards is they charge (much) higher transaction fees and are much nastier with merchants (a boon for the *customers*, in the form of easier chargebacks).
I’ve probably come across as very snarky (because, well, it’s a total jerk move to get miffed at someone for writing a friggin’ check, and while they’re “antiquated” compared to the modern electronic alternatives, they’re not quite obsolete yet — good luck paying the rent (or the mortgage payment) with a credit card), but I should point out that in principle, I do agree that if you have the option, making a payment on something you need to pay anyway using a method that gives you a bit of cash is a good idea. The point I’m trying to make is cutting down on the spending in the first place and saving/investing the money instead will net you more in the long run.
One way to do this is to stop thinking of that “cash back” award as a “bonus.” It’s not. It costs you $100 to “earn” $1.50. Think of it this way: “you get a 1.5% discount on stuff you buy with this card” or “when you buy this card everything costs 1.5% less.”
The less you spend, the more money you have sitting there earning interest (or returns if it’s living in a fund somewhere), and ultimately this nets you more than squeezing 1.5% from a credit card company.
Ok, you are right. I shouldn’t be harsh on the people in line in front of me writing a check. The last person I was behind accidentally tore her first check and then wrote the wrong amount on the second. Lets just say I was about to help her write it the third time.
“Whoops! It’s much, much easier for someone to drain your checking account using your lost/stolen debit card than with a lost/stolen checkbook. Hell, there’s plenty of automated point-of-sale systems that don’t even ask for the billing ZIP code for a transaction like that.”
From the banks standpoint (I am a banker) I would rather my clients use debit cards than checks. 1.) If you lose your debit card you a protected through zero-liability and I can simply cancel your card and get you a new one. 2.) if you lose your checkbook you have now put your checking account number and routing number in jeopardy and I can’t simply get you new checks or cancel the ones you lost because we cannot monitor your account 24-7 for this sequence of checks. I would have to close your entire account and open you a new one. GRATS!
“they’re not quite obsolete yet — good luck paying the rent (or the mortgage payment) with a credit card)”
If you have enough time to read a blog online and post a jack-assed comment like that you have enough time to log onto your banks website and use their online bill-pay feature. No lost checks in the mail, no stamp and no fees. Better yes, you have a copy of your payment and if it dosen’t make it to the destination, you can blame the bank, not yourself.
As far as rewards go. If you’re going to be using a card for protection and more convienence why not get something free out of it?
Willfe I think you need to become a little more educated on the uses for debit cards and credit cards. Go talk to your local banker asap.
I also wanted to mention about the stop payments on lost/stolen checks. Now that most companies are processing checks electronically a stop payment does not protect you from an electronic transaction so this check may still clear your account.
Also, about not being eligible for rewards programs. Most banks offer rewards with your debit card, so you do not have to have a credit card to earn rewards, everyone is eligible for a debit card.
Viva Stephanie!!
We must realize that Americans are the only first-world people in the world that insist on using the cheque (please note the proper English spelling. Not ‘check’ as in, Your ‘check’ engine light is on.) as a form of payment.
Let it be stated: The cheque is an archaic, cumbersome way to pay and be paid!
To back up Stephanie’s comments; Cheque fraud is STILL the most prevalent form of theft in the US. Why? because it’s still the easiest piece of paper to fake! Unlike debit/credit cards a lost cheque has ALL of your personal info, whether its deposited or not.
Also, did you know; If you receive a cheque and deposit it at your bank and that cheque turns out to be fake, the banks official policy is that; you as the depositor are in the best position to determine if a cheque is fraudulent or not. So I hope all you ‘checkers’ and ‘check-ees’ have brushed up on your cheque fraud forensics! If not, sorry for you, because the banks simply do not care. Banks have a six month (for domestic cheques) and 12 month (for foreign cheques) grace period in which to determine if a cheque is fraudulent or not. So if you depot a cheque from someone you think is trustworthy today, that cheque clears and you spend the money, then six months down the track the bank discovers that that cheque is in fact a fake, the bank will simply deduct the value of that cheque from you account without so much as an explanation. Again, sorry for you.
There is also absolutely no way to guarantee when a cheque you have written will be deposited, and/or posted to your account. Again, it’s your responsibility as the depositor to guarantee the value of that cheque for the next six months.
I haven’t even mentioned the bank fees and fines for bounced and returned cheques! $35 per cheque makes that little piece of paper pretty expensive and valuable!
I think you have forgotten that the cheque is nothing more than a promissory note, a fancy I.O.U., that is just as easily faked as it is written. Good luck sticking with it as the rest of the world moves forward!