Millennials’ Guide to Checks
Before PayPal, Bitcoin, Visa, and other payment systems made it possible to instantly send money anywhere in the world, checks, or sometimes cheques, allowed people to make payments without carrying large amounts of money. Even though most millennials don’t know how to write a check, this negotiable financial instrument is still relevant, although much less than it was before the Internet and computers took over and automated payment processing.
A Brief History of Checks
Checks are a type of bill of exchange, and their sole purpose is to allow for transfers of money without the need to carry large amounts of money. A check orders a bank to send a specific amount of money from the bank account of the person writing the check, the drawer, to a bank account of a payee on the check. A typical check contains the monetary amount to be sent, date, who the check is payable to, signature, check number, and various other details. Checks date to the time of the Roman empire, and we have records of early Roman checks from the 1st century BCE. Muslim traders have relied heavily on checks since the 9th century. In the 13th century, a precursor of the modern check was officially recognized as a legal device to allow international trade without the need for physical exchanges of large amounts of gold and silver. In the 18th century, the Bank of England was distributing pre-printed check forms on a special check paper to protect its customers from fraud. Because the number of financial transactions made using checks was very low at the time, no further protection against fraud was necessary as bank clerks could easily verify each and every check they received by hand. By the end of the 19th century, several countries around the world had formalized laws governing checks, boosting their adoption. Automated reading/sorting machines for checks were introduced in 1959, and check volumes continued to grow until the late 1980s or early 1990s, which is when they reached their all-time peak.
Why Write a Check?
Considering how many convenient electronic alternatives to checks there are, you may think that there isn’t a single reason to use paper instead of another means of payment. In reality, it will take a long time before checks become obsolete, especially since there are still several ways they can be more convenient than alternative payment systems.
Lower fees: Many businesses and government agencies are still stuck in the 90s, and they charge very high fees for all other means of payment except for checks. It’s inevitable for these dinosaurs to eventually move on and embrace alternative payment systems, but it may still take many years until that happens.
Don’t depend on electricity: When a disaster strikes, it may be impossible to find a working ATM or a computer with access to the Internet. Checks provide a great backup payment system that doesn’t depend on anything except for your ability to write a check.
Make great gifts: Many people like to get money instead of hand-picked gifts for a number of different reasons. But how do you give someone money and still show that you’ve put some effort into it? You can write a check, put it in a nice envelope, and add a hand-written gift card.
Checks are safe: Let’s say you’ve found a great TV on Craigslist. The person who sells it wants to meet with you in a bad part of your city, and you feel anxious going there with hundreds of dollars in your pocket. Instead of risking being robbed, you can tell the person that you would like to pay with a check. If they understand and agree, you can rest assured knowing that you’re probably dealing with someone honest. And because checks create a paper trail, it’s easy to do some detective work to find the seller if the TV turns out to be broken or stolen.
How to Write a Personal Check
Writing checks is easier than it seems at first. All you have to do to write a valid check is to fill in several lines using a permanent pen.
- Write the date on the designated line. The date should match the date you sign the check.
- Next, write the name of the recipient of the check. This can be a person, company, or institution. Always write out the full name of the recipient and don’t forget to verify that you’ve got it right.
- The third step is to write the amount of the check. Look for a line with the dollar sign next to it. Always write the exact amount including cents. Even if you want to send exactly $20, write $20.00. This is also how to write a check with cents. Because it’s quite easy to make a mistake when writing numbers, banks require their customers to also write the monetary amount of the check in word form. If you want to send $20.00, you can write “twenty dollars even” or even just “twenty”.
- Finally, sign the check in the bottom right corner. Your signature is what makes the check valid, so make sure that it matches your signature sample recorded by your bank.
As you can see, writing a check is easy. But you can make things even easier for yourself by using check writing software. For example, ezCheckPrinting Check Writer is a popular check writing solution for computers running the Windows operating system. It offers a number of handy features for the effortless writing of large quantities of checks, supporting both pre-printed checks as well as standard blank paper. There’s also Chrysanth Cheque Writer, which allows you to print valid checks using any laser, inkjet, or dot matrix printer.
Alternatives to Checks
In Europe and Asia, checks were never widely used, and most people wouldn’t know what to do with a check if they got their hands on one. As such, you should be familiar with modern alternatives to checks.
Online payment services: Online payment services such as PayPal or Payoneer offer a convenient alternative to checks. These services are typically linked to user’s bank account, but they can sometimes function without one, which is great if you just want to receive money. Founded in 1998, PayPal is by far the most used online payment system in Europe and North America. It’s supported by eBay, countless online vendors, organizations, and businesses around the world. Money transfers with PayPal are instant, but the company charges a fee for commercial users. Many people like using PayPal for online shopping because it provides a robust protection against fraud.
Internet banking: Internet banking has made sending payments much more convenient, completely eliminating the need to physically visit the bank to make a transaction. Many online banking systems allow their customers to download copies of bank statements, order a checkbook, report loss of credit cards, and more. When Internet banking first appeared as a service offered by some of the world’s largest banks, it immediately became a target of online criminals, who went to great lengths trying to steal money from Internet banking users. But thanks to modern encryption, two-factor authentication, and other security measures, Internet banking has become very safe and trusted.
Cryptocurrencies: This relatively new alternative to checks started in 2009 when an unknown person or group of people under the pseudonym Satoshi Nakamoto released Bitcoin, the first cryptocurrency, and worldwide payment system. Not even 10 years later, Bitcoin’s market capitalization far exceeds the market capitalization of some of the world’s largest businesses. What’s more, Bitcoin has inspired over thousand other cryptocurrencies, most of which can be used to send money across borders. For example, Monero offers an unprecedented level of anonymity, making it perfect for people who live in countries with oppressive regimes. To use cryptocurrencies, one only needs a modern smartphone or computer to download a cryptocurrency wallet and some free time to understand how the technology works at the most basic level.
Cash: Even though checks are largely meant to replace cash, there are many cases when cash is simply irreplaceable. To start with, cash is the most direct means of transferring value there is. A hundred-dollar bill can give you hundred dollars’ worth of goods or services regardless of whether you can connect to the Internet or turn on the computer. Cash also doesn’t depend on any intermediaries, even though its value is obviously controlled by central banks and other financial institutions. Finally, cash is relatively difficult to fake, and even people without any special training can easily spot counterfeit bills just by paying attention to a handful of counterfeit protection features of modern bills.