Are We Nearing the Death of the Personal Check?
When is the last time you broke out your checkbook to pay for something? Do you even remember when you last used it? Most Americans have adopted the more modern methods of spending thanks to mobile wallets and apps like Zelle and Venmo.
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According to a recent GOBankingRates survey, 45% of people haven’t written a check in the last year. The next largest group — 23% — only write checks once a month. It’s pretty clear that the personal check has been rapidly waning in popularity — but will it ever fully go extinct? According to some experts, the answer is yes.
Checks Don’t Fit in With Our New, Digitized ‘Normal’
“Many organizations that still receive physical payments, such as checks, for their services are realizing this is no longer practical in our new, digitized ‘normal,'” said Andrew Gilboy, former general manager at GoCardless. “Especially when factors like U.S. postal service delays come into play, checks are becoming an even more unreliable way for businesses to get paid — something that can mean the difference between paying employees and closing up shop.”
Not only can the delays in payments by check hurt businesses, but they are also no longer preferred by consumers.
“Consumers prefer different payment methods these days, ones that are more convenient and deliver a seamless customer experience,” Gilboy said.
Better, Faster Payment Alternatives Exist That Can Replace Checks
“Another reason why checks may go extinct is the rise of alternative payment options, many of which are better suited for today’s [fast-paced world],” Gilboy said. “Bank debit (ACH debit), for example, enables money to be pulled straight from the payer’s bank account when bills come due. This can help businesses reduce the costs associated with chasing late payments, minimize bad debt and create more predictability around when they’ll get paid.”
Paying with debit or credit is also faster than using checks.
“Check processing takes longer than credit or debit cards, potentially impacting both the business and consumer,” said Leslie H. Tayne, founder and head attorney at the debt solutions law firm Tayne Law Group. “Businesses can be penalized for processing checks that return with insufficient funds. Additionally, those who pay with checks can fall into bad budgeting habits and potential overspending if they don’t balance their checkbook. Credit and debit cards ensure that businesses receive their payments for services and that consumers understand how much they have to spend at any given time.”
Checks Are Less Secure and More Inconvenient Than Alternatives
In addition to payment processing being slow, there are other drawbacks to using personal checks.
“While there is a risk of someone stealing your financial information from any form of payment besides cash, checks are less secure than credit or debit cards,” Tayne said. “Account information and routing numbers are listed on checks, and if a checkbook is stolen, it is easy for someone to write bad checks and possibly gain access to your accounts. And while it is easy to cancel or freeze a credit or debit card, it becomes more of a hassle to change account information if it has been compromised due to stolen checks.”
Checks are also less convenient than debit or credit cards.
“While carrying personal checks might not seem like more of a hassle than carrying a credit card, checks are finite and need to be replaced more often,” Tayne said.
But Don’t Throw Out Your Checkbook Just Yet
Although personal checks may be on the path to extinction, we aren’t there quite yet. Currently, there are some instances where a personal check could be the best option.
“Personal checks can offer some benefits,” Tayne said. “Checks can be used for larger payments where credit cards aren’t accepted, such as rent or a mortgage.”
And some businesses and individuals may simply prefer that you pay them with a personal check.
“Many still see advantages of using paper checks for certain transactions,” said Ken Tumin, banking expert and founder of DepositAccounts.com. “For example, paper checks offer an easily tracked paper trail, with cleared paper checks providing proof that payments were received. It may take a couple of decades before paper checks go the way of the horse and buggy.”
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