On July 15, 2024, Target stopped accepting paper checks, citing low volumes. There’s no disputing that; checks were used in just 3 percent of all transactions in 2023, according to the Federal Reserve. Check usage peaked in 1995 and has been steadily declining ever since.
Target’s move made headlines, but it’s hardly the only retailer that has relegated checks to antiquity. Whole Foods, Aldi, Old Navy and Lululemon are among those that don’t take checks either, NPR reports.
Even cash is becoming a thing of the past. Many major stadiums, for example, no longer accept cash. The Fed says just 16 percent of transactions were made with bills and coins in 2023, well behind credit cards (32 percent) and debit cards (30 percent).
I don’t envision the U.S. becoming a cashless society anytime soon, although I could see checks becoming extinct. I’m not sure my daughters (who are 9 and 3) will ever write a check.
Payment alternative to checks
Cash has a few potential advantages over checks, debit cards and credit cards. For starters, the FDIC reports that about 5 percent of American households are unbanked and 14 percent are considered underbanked.
Some people like the privacy and anonymity of using cash. Cash can also be used as a budgeting tool. The envelope method, for instance, involves filling envelopes with cash for specific purchases such as groceries, entertainment, clothes and so on. When the envelope is empty, you’re either done spending in that category for the month, or you need to reallocate funds from another envelope (but you can’t go into debt).
Debt is the one big drawback of credit cards. If you’re among the 44 percent of credit cardholders who carry balances from month to month, you can face steep interest charges, as the average credit card interest rate is a near-record 20.71 percent. Of course, if you’re able to pay in full, you avoid interest and gain advantages such as rewards, convenience and buyer protections.
That’s my personal preference — to use a credit card like a debit card. That means I pay in full (so the interest rate doesn’t matter), and then I gain all of credit cards’ advantages. And although some people like debit cards because they’re convenient and don’t charge interest, I rarely use my debit card because — like most debit cards — it doesn’t offer rewards.
Even though I rarely pay with cash or a debit card, I can see why these payment methods appeal to some people. I can’t think of many nice things to say about checks. They’re not very secure (I’ve always found it odd that your checking account number and your bank’s routing number are printed right on the paper), they don’t offer rewards and they’re not particularly convenient.
I write a few checks a year when absolutely necessary
I’ve only written nine checks over the past year, and I would have preferred to have written zero:
- Three were to my younger daughter’s preschool which only has one other payment option (a credit card processor which assesses a hefty “convenience fee”)
- Two were to a life insurance company that doesn’t accept any other payment methods
- Two were to my older daughter’s elementary school which only accepts cash or checks for field trips (I worried about sending cash since it could have gotten lost; I suppose the paper trail is one advantage of checks)
- One was to a car dealer that doesn’t offer any other payment methods (I’m sure they didn’t want to pay the credit card processing fee on my $27,000 transaction, although I would have loved using my 2 percent cash back credit card and pocketing $540 in rewards)
- One was to a home repair company that didn’t offer any other payment methods
All of those could have been replaced, in theory
My preference would be to use a credit card for everything (without a processing fee), mostly because of the rewards. I make sure to pay in full to avoid interest.
I understand that some organizations, such as the small business that resurfaced my driveway, don’t want to pay credit card processing fees (these average 2.2 percent of the transaction, according to The Nilson Report). If credit cards aren’t an option, I would rather use a debit card or a peer-to-peer payments service, such as Venmo, Cash App or Zelle. I have paid other contractors with Venmo and Zelle, but this one didn’t allow it. The school field trip also could have been well-suited for a peer-to-peer payments service.
The car dealer and the life insurer (maybe the preschool too, although it’s a smaller operation) should have an online interface that can accept payments via ACH — basically, a digital version of a check. When you pay your credit card bill online, for example, it’s probably an ACH transaction debited from your bank account. Most payroll direct deposits are distributed via ACH, too.
As an aside, isn’t it funny how most “paychecks” are no longer checks at all? It’s similar to how “hanging up the phone” is a confusing expression to youngsters who never actually hung a corded phone on the wall.
Overall, niche examples have kept checks from completely dying out. But we don’t really need checks. There are suitable alternatives and very little justification for continuing to use checks. I can’t remember the last time I saw someone write a check at the grocery store or another retail location (it has probably been years).
The bottom line
I’m usually of the “different strokes for different folks” mentality. As in, I don’t use my debit card much, but I understand why some people love theirs. Same for cash. But checks? The arguments in favor of keeping checks around feel pretty flimsy.
Just don’t tell my wife. We recently ran out of checks and had to order a new set. She gleefully told me she had wanted to get rid of our boring bank-issued checks for years and couldn’t wait to order some with a more interesting design.
Two hundred pink flamingo checks showed up in our mailbox a few days ago. If we continue writing nine a year, that’s a 22-year supply. I just turned 40, and I might be collecting Social Security by the time the box runs out.
Have a question about credit cards? E-mail me at [email protected] and I’d be happy to help.
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