The Disadvantages of Using Check Payments

With the financial world becoming increasingly more automated, check payments are steadily losing in popularity to other forms of payment, such as debit and credit cards. In addition to everyday minor conveniences associated with check payments, writing checks can easily also lead to legal woes and even thievery and fraud.

The days when only your bank had access to your account number are gone. Nowadays, any merchant or employee who handles your check has easy access not only to your account number, but also to your name and all contact information, making it easier to perpetrate fraud. In addition, check payments are starting to be processed as "electronic debits," giving merchants further access to your personal account and, thus, opportunity to make unauthorized deductions -- a practice that is actually legal and can be stopped only with a written objection from the account holder. Unlike credit or debit cards, checks offer very little protection for the consumer or recourse when fraud occurs.

Checks take time to write, process and clear -- far more time than a credit or debit card. If you write even a few checks every week, you're losing precious minutes that you could save with a quick card swipe. After you sign your check and give it to a merchant, moreover, you'll have to wait two to three business days before the check clears in your account and your balance reflects the payment, increasing the likelihood of overdrawing your account or committing accounting errors.

Although banks are moving away from mailing canceled checks back to account holders, the necessity of thorough recordkeeping still remains. Even if your canceled checks are available only as an online digital image, they still leave a paper trail that you are responsible for following and, in the case of fraud or theft, verifying. When your statement comes, you must check it against your canceled checks, which is not only time-consuming but also cumbersome when it comes to keeping accurate financial records. If your bank still mails physical canceled checks to you, it's just more paper to store and keep in order.

Unlike debit cards, which need only a four-digit PIN, checks require a signature. If you are injured or rushed when signing a check, it can be returned because the signature doesn't match the one on file. In addition, while some merchants still accept checks, still more have opted not to in order to avoid processing delays and the inconvenience of a bounced check. Even if a merchant does accept checks, she may not accept yours if it's an out-of-town check or even outside a 25-mile radius of her business. Further, the information on a check is easily stolen; thieves may need to see only your name and address over your shoulder to perpetrate fraud.