Even though personal checks accounted for less than $20 billion in U.S. transactions in 2012 – down from $40 billion in 2000 – many people still rely on that old-fashioned payment method, particularly in certain situations, like paying rent or sending money to family and friends. That can get expensive when the blank drafts run out, though.
For those who only write one or two checks a month, online-only banks like Simple as well as financial institutions and companies like Venmo, PayPal and Square offer alternatives to ordering 80 or 100 checks at a time. Here are some of the options to buying box-loads of the documents:
The single check
Simple, a Portland, Ore.-based online bank founded in 2009, provides a creative solution to customers who need to write occasional checks. To request a draft, an account holder simply fills out the information through the website, and the bank sends a printed check to the payee, signature and all, for free. The entire process takes about three to five business days, though, so it requires a little planning ahead. As another payment alternative, the bank also offers free electronic funds transfers, which clear in two days.
The cashier’s check
Many banks and credit unions let customers buy cashier’s checks with no service fee. The only difference between one of these bank-issued drafts and a personal check is that the issuing financial institution backs the face value of cashier’s checks it has issued, while a personal draft relies on the account holder to back the payment.
Find out which banks give users access to free cashier’s checks and what the monthly limits are before fees are applied (for some banks and credit unions, it’s three checks; for others, 10). In most cases, getting a cashier’s check must be done in person. However, some institutions allow consumers to order online.
The wire transfer
Sending money electronically between financial institutions is old hat, but today many banks and credit unions have reciprocal relationships, allowing customers to move funds from one account to another online. Some banks don’t impose fees for this service, while others may charge as much as $80, depending on the amount being transferred, and the receiving bank may also hit you with additional costs. Generally, international wire transfers require the recipient’s name, account number and the bank routing number of that person’s bank or credit union. For electronic transfers between accounts in U.S. banks, simply providing the receiving party’s mobile phone number or email address can be all that’s needed, and it’s often free.
Not only is this more affordable than purchasing checks – it’s also less of a hassle. Payments may take a few days to clear, so it’s a good idea to submit the transfer early on to avoid being late.
The third-party transfer
For sending money to friends and family, consider using a third-party vendor like PayPal instead of sending a personal check or electronic transfer. Users only need to supply the recipient’s email address to complete a transaction. The only caveat: PayPal charges a service fee of about 3% when debit or credit cards are used. The fee is waived, however, for domestic bank transfers and when the money comes out of a PayPal account. While 3% isn’t a lot when the amount involve is small – just $3 for a $100 transfer – it can add up quickly for larger sums.
Square, the money-transferring app, offers a cost-effective alternative: for electronic transfers under $250 per week, there’s no fee. Users can verify their identity and upgrade their accounts to increase that limit to $2,500. With sophisticated encryption and anti-fraud algorithms, Square’s online transfers can offer even more security than checks.
With Venmo, a mobile app, users can also transfer money free of charge with only an email or phone number. Although customers pay a 3% fee for credit card payments, transfers between banks and most debit cards are free. This payment system isn’t made for all transactions, though; Venmo is designed for personal payments among acquaintances, not between consumers and merchants.
Heading into history
As consumers gravitate towards plastic and online payments, personal checks are becoming artifacts of the past. So why buy them by the box? Finding effective paperless alternatives can unclutter your financial life while saving a little money on the side. But if you do need a paper draft, you still have some free options.
Checkbook image via Shutterstock
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