Lending Club Blog

Personal Checks & The Checkbook: Dead?

deadfeetmed.jpg

Despite the upsides of having a high interest checking account, in an increasingly paperless world, personal checks and the defiantly tangible checkbook are fast becoming a dinosaur of finance. Sitting at the checkout counter, fumbling through check reconciliation pages is a thing of the past. With so many new ways of shelling out dough, consumers have a bevy of options at their behest, and unfortunately for the aging check, many are choosing the slicker, quicker payment options.

What is the cause of death?

Several factors are pointing the demise of the personal check, not the least of which is cost. Producing checks is expensive for banks, and with so many more cost-efficient options available, check manufacturing is in an obvious decline. What’s more, consumers often decide against using personal checks due to their own cost factors like postage and ordering fees. The money going into the check process has started to outweigh the convenience of using the medium for transactions.

Also, personal checks have grown increasingly unsafe to use. Functioning as a fancy IOU slip, they are frightfully easy to forge and counterfeit. And when fakes aren’t being passed, people are signing away large sums of money that they most likely don’t have. So much care goes into processing a check—electronic transfer, valid ID verification, DNA analysis—that the process of paying can sometimes take more time than the shopping itself.

Check Payable To: Amanda Huggenkiss

In a sense, it is too bad to see them go, because writing a check had its own strange charm. There was nothing quite like signing your name in really huge letters to offset the fact that the check was for $4.91. Good times were had writing fake memo lines that ranged from inappropriate to uncomfortable. And no one will forget how life-affirming it was to get those checks with the forest designs that screamed “environmentalist.”

But there’s also plenty about personal checks that no one will miss. Knowing what day it is matters much less now, which is good because it is one less thing to remember. No longer must people carry a pen with them or buy carpenter jeans just so they have a place to put their checkbook. Buying groceries is quicker, and paying bills is faster.

Balance? What’s that?

The greatest timesaver enabled by transitioning from paper to plastic is that there is no more need to balance your checkbook. Thankfully, online banking and monthly statements do all the hard work for you. Reconciling payments is a snap thanks to itemized paperwork and easy-to-understand accounting. Back in the day, balancing the checkbook was a chore; now it is borderline fun (especially where high interest checking accounts are concerned).

Technology has done wonders for banking, even if it has spelled the end of standard checking. E-commerce and credit/debit cards have changed the way we pony up for goods and services. Faster, quicker, with less thinking—that’s the way the Man wants us paying. Writing a check takes so long, we might change our minds about our purchase midway through our painfully girly signature (“Do I really need the director’s cut of You’ve Got Mail?”). At the grocery store, we can swipe our credit card with ease. At McDonald’s, we can wave our debit card and be done. Before too long, all we’ll have to do is think about paying, and the funds will be automatically deducted from our checking accounts. Yikes!

Not every payment is digital…yet

Only a few situations still call for the old pen-and-paper payment. I pay my rent with a check because my landlord does not trust me enough to put my monthly rent on credit. Well, I don’t trust her to fix the stove! Checks also come in handy when I want to impress my teenage friends with my oldness and resistance to change. Other than that, my checkbook spends its days tucked away in a desk drawer…or is it by the phone? I haven’t seen it for a while.

Mr. Check meet Mr. Online Bill Pay

Nowadays, we have a convenient array of payment options built on saving time, energy, paper, and—in some cases—thought. One of the check’s favorite days was bill day, but technology has delivered an electronic bummer to the arcane check community. Online bill pay is here, and it is fabulous. Most services offer a way to check when new bills are available, set up monthly payments, view past payment history, and complain about your cable. All of these used to be done on paper, in your kitchen, by light of an oil lamp.

Online bill pay struck a pretty serious blow to check writers everywhere, but a bigger nemesis is the check card. With most bank accounts, clients receive a check card, a debit/credit card that can be used to automatically withdraw funds from one’s account. The goal of the card is to offer a fast, efficient means of payment, eliminating the need for cumbersome checkbooks and time-wasting memo lines. At grocery stores and retailers nationwide, paying with plastic is as easy as pie. Most places simply require a quick swipe, a quick signature or PIN number, and away you go. Getting rid of money has never been so easy.

Cash is still King

Of course, in addition to checks and cards and online payments, there is still the standard cash transaction. Of all the ways to pay, cash is the most honest, germy way of doing it. Carrying big bills is a lot better than flashing Hello Kitty checks, and dropping a cool twenty on the counter is a lot easier than writing $17.88 in cursive. I like paying in cash because it makes me feel like I’m doing something illegal; writing a check just makes me feel old.

The senility of checks is an apt metaphor for the current state of personal finance. The grumpy old checkbook is the one yelling at the credit cards and online bill pay to “turn that music down!” Life is passing the check by, and there is nothing it can do about it.

As with anything, though, change is good. And the shift from paper transactions to electronic is a great breakthrough. Consumers and banks both benefit from the new technology, and the economy will be better off in the long run. And who knows? Maybe a few years down the road, we’ll be showing our teenage friends our check cards to prove our oldness and resistance to change. Meanwhile, with all that money you’re saving with online bill pay, stick a little cash into a lending account on LendingClub.com and see how you can earn great returns and keep your accounts in the black.

Sound off

Is the checkbook really dead? How do you pay your bills?

Thursday, January 24th, 2008 at 1:20 pm

Comments (4)

  1. i use online banking way more than checks as well :)

    January 24th, 2008 at 2:19 pm

  2. Steve:

    You can speak for yourself. As for me, I just passed an audit by
    the IRS thanks to my ability to show copies of cancelled checks
    that were 4 to 5 years old. You just try proving you paid alimony
    to your EX using an online bill pay system. Oh, heres a good one,
    try proving you paid your home improvement contractor without a
    defensible audit trail. You can call it old fashioned if you want,
    but so is living within your means. But I am not going to stop
    doing that either.

    January 28th, 2008 at 6:34 am

  3. Steve:

    Here is some food for thought regarding the security of paper
    (checks included): "http://www.nature.com/nature/journal/v436/n7050/full/436475a.html">
    nature.com

    January 28th, 2008 at 6:41 am

  4. Justin:

    If it were to me, I would love to use personal checks over the
    internet but you just cant do that and have to use credit card or
    paypal. But I really wish I could use checks to make all of my
    payments.

    December 17th, 2010 at 3:46 am

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