The Truth About Personal Checks

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Most of us use our credit or debit card when we need to make purchases quickly. Many view personal checks as a payment method of the past. But studies show checks are still quite useful and popular among the majority of Americans.

The Federal Reserve System keeps track of trends in the use of various payment choices with studies conducted on a regular basis. The 2004 Payment Study was the first time in history that total electronic payments passed up the number of payments made by check.

The 2006 study show about 1/3 of all payments were made with checks. While that number represents a double-digit drop from the 2003 study when checks made up 46% of all payments - it also shows that checks still surpass any single form of electronic payment. The next closest payment option is debit cards at 27%. The Fed's research indicates more than 30 billion checks were written in 2006.

While the data appears to show that check usage is declining somewhat rapidly, it does not necessarily mean that Americans are giving up on personal checks completely.

According to a paper released by the Federal Reserve concerning its study, "This result leads us to believe that while families adopted new forms of payment, they did not immediately stop using the older forms of payment. Payment choice likely depends on the nature of the transaction."

A survey conducted by one of the major check manufacturers in 2007 seems to confirm these findings. Harland Clarke found that fewer consumers are using checks for retail payments.

In 2004 a study showed 42% of consumers used personal checks and 31% used debit cards. Three years later those numbers reversed. 31% of consumers used checks to make retail purchases while 41% used debit cards.

Yet this same study shows writing personal checks remains an activity most Americans do every week. 67% of those questioned said they write 10 or more personal checks every month. Personal checks are typically used to pay utility bills, rent, and for paying real people and many independent contractors.

Demographics also play a major role in a household's preferred form of payment. According to the FRB's report, "Research has shown that age, income, and demographic characteristics are correlated with use of payment instruments."

Every family is different. They use debit and credit cards differently and they use personal checks differently. But the percent of households that continue to use personal checks has barely budged.

"Despite these increases in use and holdings of electronic forms of payment...the share of families that reported using checks as a main way of interacting with a financial institution remained stable at approximately 75 percent of families.

Convenience is another factor that comes into play when someone chooses how to pay. For instance, debit and credit are easy to use when you shop online, while a personal check is better suited for casual person-to-person payments.

In addition, there are different benefits to using one form of payment versus another. Officials with the Federal Reserve make this point. "Some card products offer consumers airline miles or cash back bonuses when they are used. Other people may prefer checks as checks could be perceived to help consumers with budgeting or accounting."

The region of the United States where checks are used most often per capita is the Midwest while people on the West Cost write checks the least.

The average personal check customers are women over the age of 40 with an annual household income of around $62,000.

The Fed's Survey of consumer Finances found it is younger people under the age of 35 who are more likely to regularly use debit cards

Those questioned by the major check manufacturer indicated the majority of customers purchased checks directly from their financial institution. About 20% purchased checks through direct mail.

However the most inexpensive and efficient way to order personal checks is from an online check printer such as Check Advantage.

Forrester Research published a study in 2007 finding that one-third of people with checking accounts would like to order checks online. However, the majority of check sales come from the bank (70% to 80%). Only 8 to 15% of checks are ordered online.

It won't take long for you to realize that it's a good idea to order checks online. Not only do you have a much wider selection of check designs to choose from, you can also save 75% off what your bank usually charges you to reorder.

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