PAYING WITH CHECKS

Each week, I think of something that will help in the area of personal finance. This week, I was writing out the tithe check and I noticed how little I write checks. Checks are written now for only specific items, not for everything. If you observe at a check out counter that very few people write checks. Most people that write checks are usually older ladies. It can be frustrating to watch these ladies write a check. They start writing it after everything has been wrung up which can take up a lot of time. You can tell that these ladies are not time challenged.

Checks allowed people to not to have to carry a lot of money with them when they went to the store. Checks are the same as cash with the exception of a time lag. Once a check is written, the receiver must take the check to his bank and deposit it and then his bank collects the funds from your bank. This takes time for a check to clear. If the receiver takes his time in cashing the check, you will have to list that check as an outstanding check on your monthly bank reconciliation.

Checks are considered near cash. They are an early form of a debit card. What are checks good for in our day of automation? Checks are good for bill paying. Some institutions are small and do not need computer sophistication and thus paying by check is the most practical. I am thinking about the church for instance. Some churches are large enough and you can make your tithe payments by direct deposit. However, this is not practical for some churches and thus there is the usual collection with checks being written for tithes.

Unless, I can put a charge on my credit card, I write a check. For the month of November 2008, I wrote a grand total of six checks. Four were tithe checks to the church, one was for a magazine subscription and one was to pay the personal portion of the church phone bill. Checks are still practical for certain purposes, but their importance as a means of payment has been greatly diminished by the use of credit cards and debit cards, online bill paying and direct deposit.

Check writing is still with us and will probably be with us for the foreseeable future. Checks still have practicality and by maintaining certain balances with some banks, there are no transaction fees or costs to have checks printed. The church has to pay a check printing charge but this $15 or so has to be paid rarely as the church writes approximately 8 checks a month. This means that 200 checks will last 25 months. A minor expense over the course of two years.

Check writing thus is a form of payment for goods and services. It is a cash substitute and offers convenience of not carrying cash. Checks are useful when making a major purchase or making a large payment. This may require purchasing a cashier’s check from a bank. This assures the receiver that the purchaser has adequate funds to cover the transaction. In other words, checks are not going to go away because they still are a practical means of payment. If they were not, we would cease to use them. The frugal are a practical people and still use checks.