Checks, Pros and Cons, and Alternatives

A check is a type of negotiable instrument that allows people to pay to a third party, whether a person or retailer, on demand. It is a signed and dated written instrument that orders the payment of a specified sum of money.

Benefits of Using Checks

Being a form of bill of exchange, checks were created to allow people to make payments. Thus, when you use them, you don’t have to carry large amounts of cash. To some people, checks are an old-fashioned way to make payments, especially now that there are alternatives such as debit and credit cards. At the same time, they are easy and convenient to use. Another benefit is that they are safe to send by mail compared to cash. Many people keep a register and use it to record checks. This helps them to keep track of their payments and spending in general. They serve the same purpose as cash, the only difference being that it takes 1 – 2 days to have them cashed. On the downside, some retail stores and other vendors don’t accept them. Most hotels, airlines, shopping centers, and stores accept credit cards.


To write checks, consumers have to open a bank account at a credit union, savings and loan association, or bank. Financial institutions offer checks to clients after they make a deposit. In many cases, you have to buy them from the bank. When you want to pay for goods or services, you just fill in the check and hand it to the retailer. The payments you make should not exceed the money deposited in the bank. The financial institution will not honor your check. The problem with bounced checks is that they cannot be processed. Known as hot, returned, rubber, and dishonored checks, they incur fees in the amount of $20 to $40. The fees vary from one institution to another. Recipients and retailers that receive too many bounced checks may choose not to accept them as means of payment. There are many reasons why retailers and other parties receive bad checks. These include non-existent and frozen accounts, and accounts that are under investigation. Some con artists issue checks without having a bank account. In other cases, the issuing bank has taken action to deny authorization or the person who wrote the check decided to cancel it. If the accountholder passes away after writing it, it will bounce.

Other Disadvantages

Another problem with checks is that financial institutions charge a fee for cashing them. The fee varies from one bank to another and is usually a percentage of the sum. Fees usually range from 1 to 5 percent and depend on the type of check to be cashed.

Information That Checks Contain

Checks include pre-printed information such as a bank code number, name of the financial institution, number, and address and name of the accountholder. The latter should fill in information such as the amount, recipient (company or person), the date, signature, and an optional comment.

Alternative Methods of Payment

Apart from debit and credit cards, there are other convenient methods of payment. You can choose from traveler and gift checks, money orders, cash, and Western Union. Online bill payment is another option. Banks offer online banking services that allow users to transfer funds, pay bills, look up their balance, order checks, and monitor their investments. Online banking saves time and allows accountholders to view their transactions and account history at any time and from anywhere.

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