What the Heck is a Check? - Part 2

This week I am continuing the series of ‘What the Heck is a Check?’ providing additional information and steps to help you feel more at ease when writing that first check. 

Why would I ever use a paper check?

There are quite a few answers to this question.

1) Not all businesses accept credit or debit card payments. Credit cards charge merchants processing fees, which can eat up a chunk of a small business’s profits.

2) If you find yourself in a situation where the credit card processing machines or internet goes down, you can usually still pay by check if you don’t have enough cash.

3) Checks are traceable. If you want to be sure you have a record of paying your taxes or an invoice for a business that doesn’t accept credit cards, a paper check is your best bet.

4) Checks are less expensive than money orders. If you have to purchase a money order to pay someone who doesn’t accept cash or other electronic forms of payment, you’re going to pay a fee each time.

5) They’re great for easy gift giving. How many times have you been on your way to a birthday party or another event where you needed to arrive with gift in hand, but either didn’t have time to shop or weren’t sure what to get someone? In this case, a check in a card is more personal than cash, gives the recipient something they can use to track their “thank you”, and is less expensive than the fees charged for credit card branded gift cards.

There are more reasons, but these are the most important ones, so let’s move on to the next question.

How do I write a check?

There are 5 fields you need to fill out to write a check in order for the recipient to accept and deposit it; the date, the pay to line, the numerical dollar amount, the written out dollar amount and the signature field. The memo or reference line is optional but can be used to write in things like an invoice number or the type of service you’re paying for.

We will finish off the series by addressing a few security issues. Stay tuned!

- Margaret Gooley, CFP®, Worley Erhart-Graves Financial Advisors