[MONEY] Still Paying Bills With Paper Checks?

Category: Finance

Do you still have a checkbook? If so, you’re in the majority, but only if you’re over age 55. Many young people have never written a paper check. Paper checks are dying, replaced by plastic cards and various forms of electronic money transfer. Will checks eventually be banned altogether? Read on for the scoop…

Paper Checks Are Almost Extinct

I'm just one year shy of the double-nickels plateau, but I've been done with paper checks for years. I'd much rather point, click and pay. Or even better, arrange for automatic payments. I haven't even kept a checkbook register for the past 20 years. And when I get a paper check in the mail, I snap a photo and deposit it with my smartphone.

For me, it's the nuisance factor. Just writing out the check is tedious enough. Then it's find an envelope, address it, hunt for a stamp, insert the check and the invoice, and then trudge out to the mailbox.

Oh, and I forgot the worst part… licking that glue strip to seal the envelope. Blech. (If I'm ever elected President, I'll sign an executive order banning paper checks AND fax machines.)

The chart below illustrates the dramatic decline of check payments from 2003 to 2012; payments via credit/debit card, ACH (Automated Clearing House) debits including Paypal and Square Cash, and prepaid stored-value debit cards are taking up the slack.

paper checks are declining in favor of electronic payment

The federal government stopped mailing paper checks to Social Security recipients in 2015. Seniors get paid via direct deposits to checking accounts or prepaid debit cards now. Public assistance benefits such as SNAP (food stamps) and TANF (Temporary Aid to Needy Families) switched to EBT (Electronics Benefits Transfer) cards long ago; EBT cards work just like debit cards.

The United Kingdom tried to eliminate paper checks in 2009, declaring that all payments would be made via electronic transfers by 2018. But a survey by Parliament found that 46% of citizens over age 55 relied on checks and were baffled by modern payment technologies, so that plan was scrapped.

Electronic Payments are Putting the Squeeze on Paper

Sixty-three percent of all consumers write three or fewer checks per month, up from 35% three years ago. I have a friend who writes just one check per month - to his Luddite landlord - and never pays for checks. He just asks his credit union to print a page of four “temporary” checks three times a year. He laughed when the credit union quoted over $13 for 200 printed checks. He says his next landlord will take Paypal or Square Cash “and like it.”

About 52% of U. S. Millennials never write checks, according to a survey by payment solutions provider WePay. "The younger generation — the kids who are in high school, in college now — don't even know how to write a check," said Greg Litster, founder of SAFEChecks, a company that specializes in check security, in a recent NPR interview. "It is quite remarkable, but it is a fact."

The US Postal Service found a paradox in a 2013 survey of customers. Over 91% prefer to receive paper bills by mail, but only 37% pay bills with mailed checks. Bills and payments sent via mail account for a quarter of USPS revenues - $18.5 billion in 2013. The decline of mailed checks, from 74% in 2003, is another grave wound to the USPS’ finances.

I understand this. I still want a few important bills to come to me by mail so I have a reminder of when they're due. For most others, I'm fine with paperless billing.

Some businesses stick with checks to “leave an audit trail.” But really, it means they don’t want to change their accounting systems to take advantage of the wealth of data that electronic payment methods can provide. A copy of a Paypal receipt is just as sufficient for audit or legal purposes as a cancelled check. Many businesses have accepted the change. The average daily volume of commercial checks collected dropped from 67 million in 2000 to 22.9 million in 2014 — a 66 percent decrease, according to Fed data.

Options For Eliminating Paper Checks

Even if you don’t use a smartphone (my frugal friend above doesn’t), eliminating checks along with their expense and hassle is very easy. Paypal’s Master Card works as either a credit (signature) or debit card (PIN), and it draws money from your linked bank account if your Paypal account balance is insufficient. Also, it pays 1% cash back on signature purchases each month.

Almost every bill I receive by mail shows a website which can be used to make payment. Click, enter the invoice number, and choose the method of payment. Most offer checking account, debit card, or credit card options. Some even allow you to use Paypal.

Square Cash is free for sending or receiving money between acquaintances as long as both have a debit card issued by a U.S. bank. Essentially, a Square Cash transaction charges money to the sender’s card and credits it to the recipient’s card. The money is drawn from and deposited to the checking accounts linked to the debit cards. Transactions can be initiated by either party via a mobile app, at the Square Cash website, or via email.

You don't have or don't want to use a credit card? No problem. Every bank and credit union I know offers electronic BillPay now. Some charge a small fee for the service, but it’s often included free of charge (for seniors, especially). It can be used to pay ad hoc bills or to set up recurring payments, such as mortgage or cable bills, that don’t vary. No need to buy envelopes or stamps.

Do you still cling to paper checks? If so, why? How many checks do you write per month? Your thoughts on this topic are welcome. Post your comment below...

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Most recent comments on "[MONEY] Still Paying Bills With Paper Checks?"

(See all 75 comments for this article.)

Posted by:

Lee Dalzell
11 Mar 2016

I am also way over 55. I prefer to do paper checks for several reasons..1)I do not trust computer info 2) I prefer to pay when I KNOW I have money instead of hoping the bank does not decide I don't have the money and charge me an overdraft fee 3) I can keep the checks with the receipt and Know what I paid and when. I do online buying with credit card, but only for small purchases if possible at stores.

Posted by:

11 Mar 2016

A question for you and others that use their smartphones to do a mobile deposit of a check. What limits does your bank put on it? My bank, Citibank, says I can do no more than $3,000 in a month and no more than $1,000 on any given check. I think the $1,000 is also a daily limit. There's no technological reason for it, but they seem to think they are protecting me. From what, I don't know. The money appears to be available, but if I was to try and 'cash' it, I think they might not let me do so if I was to exceed either my savings balance or any overdraft protection I might have.

Some solutions for some folks:
1. Try to have your piano tuner and landlord and others accept a check written from your bank's bill payment service. That way the bank pays the postage and you don't have to worry about a check book supply.

2. Some government agencies will be happy to do an ACH withdrawal from your account if you don't want to write them a check and then mail it to them. The IRS is one such agency as is NY State.

I still have my checks and I find myself writing maybe 1 or 2 a year. If you are going to continue using checks, don't buy them from your bank, go online to get them. A number of years ago, when I was writing checks more frequently I actually splurged and got Harley Davidson checks and the check book carrier. I have enough now I don't see my needing anymore.

Posted by:

11 Mar 2016

I still write a paper check to my church each week rather than have an automatic withdrawal taken from my checking account. It's kind of a nice reminder for me of my gratitude to God and my church. Everything else is either bill pay from a bank or by credit card. I don't use debit cards. Some of the yard workers in our area want only cash or checks which makes my checking account handy. I prefer paper billing-never know when my trusty computer might have a glitch. I was 76 years old and when I was about 12 my mother taught me to write a check properly. Sure enjoy your hints and the blog, Bob. Thank you!

Posted by:

11 Mar 2016

Because I moved to Indonesia I have had untold difficulties with my UK Mastercard either with PayPal or trying to send payments to the UK bank - in this case Lloyds. What I have learned is that it is impossible to sign up for a Mastercard over the age of 55 in S/E Asia or to transfer Mastercard UK to Mastercard Indonesia. As I cannot purchase anything of quality in Indo especially medical supplies I now do not know where to turn to next. Maybe American Express allow any age but I am not a rich man. Indo does not allow their bank cards whether VISA or with Mastercard logo on it to use online - ATM's are used for exchange of cash.

The direct connection with this article's subject may not immediately be understood but is does because it shows there are many problems still encountered today trying to pay one's bills with one's own cash.

Posted by:

11 Mar 2016

I haven't written a check in over 12 years! I have plenty of checks left on my checking account, but, the address, city and phone number are ALL wrong. Tee hee hee.

As any of you know, you can't use a check that is not printed up correctly, to match your Driver's License information. Heavens, even the information on my Driver's License is not fully correct. My license has the wrong address and city, the worst part my birthdate not right, either! I guess, I am really in a mess, aren't I? LOL

I use Bill Pay through my bank, my Debit Card, computer online pay, over the phone payments and Snap Deposit using my Smartphone, when I do get a check. As for my income - Direct Deposit, wouldn't have it any other way. I have been using Direct Deposit for 19 years for Social Security income and no issues. I first started using Direct Deposit back in the early 1980's. I can only say, it definitely saved me time and energy.

Posted by:

Wild Bill
11 Mar 2016

Bob, you are obviously among the connected and well on the way to the future. The same can't be said for a not inconsiderable number of folks who live in less to unconnected environs. Its easy to pay by card at the store, maybe, but if you are not connected at home (out in the boonies) you can't pay online. And until all us old fogies
die off, we may still need checks, banks and their
attitudes be damned. I suspect some of the less connected would echo this, if they were connected.

Posted by:

11 Mar 2016

I prefer paper checks for almost everything. First of all, I control when the bill is paid (cash flow) and with charitable gifts, I have a record in my checkbook that is far more informative than an entry on a bank statement. I use a ledger checkbook and write a lot more than the amount about the bill being paid. And the check does not have to match your drivers license. My name on my license has been wrong for 61 years because I don't use my first name. No problem. Direct deposit for income is fine.

Posted by:

11 Mar 2016

We're over 70 and pay all monthly bills by paper check. For what it's worth, it's not technophobe, it's frrom too much knowledge and experience. I started programming in 1969, got my first pc in 1979 and never looked back.

We purchase online with credit cards. However when it comes to my money, I want to control it. No electronic billing/statements. If you think tech support is bad, try resolving a problem with a financial customer representive online or on the telephone.

There's a reason everyone wants you to sign up for automatic renewals and it's not for your convience. BTW, google "ghost accounts"

Wow, I guess you hit my hot button.

Posted by:

12 Mar 2016

I occasionally use checks, but do pay with my computer mostly. What inflames me most is when I'm in line at a store and somebody in front of me starts fumbling for a checkbook and takes 10 minutes to complete it. Then the cashier has to do a TSA inspection to verify the person is legit. I usually pay for smaller purchases, like in the store, with cash. Cash is still king. The gov't may destroy it eventually, but I'd rather have a pile of cash than a pile of 1's and 0's on somebody's hard drive.

Posted by:

12 Mar 2016

I still make out a check to bring my tithe "into the storehouse". I also pay the local snowplow guy by check when I receive his monthly paper invoice. It is more convenient than driving 8 miles to pay for that service as he has no website or credit card option. I like having all options available to me and am set up to take care of any kind of payment with envelopes and stamps at my desk where my desktop computer still sits. I pay online automatically when safe and available but roll with whatever option best suits the situation. I know that technology tends to shape what we think is how it should be done today, however age, tradition and area also shape the norm for each of us. Not everything is "one size fits all" and that's OK with me!

Posted by:

13 Mar 2016

Since I'm in the senior category it must explain my use of paper checks. I just like seeing what my bills are every month. I hate automatic payments such as Siriusxm. The price keeps increasing and you don't really notice until one day you realize the service just isn't worth it.

Posted by:

14 Mar 2016

I'm 64 years old.I write one check a month to my Luddite landlord.Have been paying all other bills online for at least 15 years.I agree with your friend,my next landlord will take Paypal or Square Cash “and like it.”

Posted by:

14 Mar 2016

Upcharges, convenient fees,... are reasons we pay with checks. We do not have a debit card to pay: Real Estate, Fed and State taxes, auction bill, paying neighbors, farm stores, gifts, WI vehicle plates,purchasing a new car and where large amt of cash are not feasible...The list can be quite large, so do not sing the doom of writing checks just yet. We pay all that we can electronically BUT....

Posted by:

16 Mar 2016

Like some other Seniors, I use very few checks. Local painters and workmen want a check written on a local bank. Can't say as I blame them because they are ripped off sometimes. My donation to my church is paid by my bank each month. Guess my halo is slipping. Everything else is paid by direct debit or I authorize payment online. Have been doing this for years and have not had the first problem. I know it can happen but so far so good. Love some of the folks' comments about why checks are still an important part of their lives. I completely understand but can't imagine having to write checks again and buy stamps and envelopes.

Newsletter is such fun...

Posted by:

16 Mar 2016

As a former small business owner I always wanted to take checks so as to not loose a percentage of our sale. I try to use paper checks or cash to other small businesses for the same reason. Oh and I am very connected, have been with computers since the DOS days, have a smart phone etc. No I do not use a lot of checks, but and glad I still have this option available.

Posted by:

16 Mar 2016

If a person owes the government any tax payments, they would be better off mailing in a check than using a credit card based means of payment. Unlike retailers, the government does not pay the 2% or 3% charge made by the banks for credit card payments. So for tax payments the bank charges the fee to your bank account instead. If your required tax payment is large, this additional charge to your bank account could be significant.

Posted by:

18 Mar 2016

I pay most things electronically, but due to their backward attitude, I pay my city land taxes (and a few others) by check. You see, some places like this will LET you pay electronically but will charge you a huge fee to do so. Why should I pay $25 to pay my tax bill of $825? They should pay ME for keying in the data! Since they will not wake up, I'll send them a check and let them key it in. SMH!!!

Posted by:

19 Mar 2016

We are over 80 and have been using plastic or telephone paying for many years and lately on line. In some cases we select automatic deduction but not when dealing with organized crime (ie. telecoms) As most Americans know pens only work up here in Canada in July and August so cheques are out most of the year.

Posted by:

04 Apr 2016

Not only are checks not even legal in Denmark anymore,
the banks will no longer send you (dead tree) bank statements
by mail. Nor will most government agencies send you paper letters,
as all is now handled through an electronic (mail box) —
http://www.e-boks.com/ — which sounds great at first,
but is hardly appreciated by seniors (some of whom
have asked for exemptions) or by… freedom lovers,
who remain skeptical of the system's safety and
of government spying

Posted by:

30 Jun 2016

There are many reasons personal bank checks need to survive the eBanking revolution.

1) Checks don't have daily/monthly limits on purchase amounts.

2) Checks can be processed by people who don't/can't take credit cards or PayPal/Dwolla/Venmo/etc.

and finally

3) Checks provide the ability in many states to convey restrictive or conditional endorsements on the back of the check, which are legally binding agreements in many states through the Uniform Commercial Code. These endorsements are very powerful tools used to enforce debt negotiation settlements and credit repair activities binding creditors to accept the check as payment in full, including requiring the creditor to fix credit reports and stop any further collection activities. See http://carreonandassociates.com/restrictive-endorsement/ for more information.

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