Check Writing on the Decline

According to a recent study performed by the Federal Reserve, the number of checks being written has dropped significantly in the last ten years. In fact, approximately 49.5 billion checks were written in 1995, while only 36.6 billion were written in 2003.

Not surprisingly, at the same time as check writing is on the decline, the number of debit and credit card transactions is on the rise. According to the Federal Reserve, the number of debit card transactions jumped from… 8.3 billion to 15.6 billion between 2000 and 2003. Credit card transactions leaped from 15.6 billion to 19 billion during that same time period.

The reasons for the transition are rather simple. First of all, using a debit card or a credit card is more convenient than writing a check. In addition, all purchases can be kept in one place when a credit card or debit card is used, which makes it far easier to keep track of all of your finances at the end of each month.

Even merchants are jumping on the electronic payment bandwagon. Whether you realize it or not, many utility companies change your check payments into electronic payments because it actually costs them less and allows them to get a hold of your money much more quickly. Even stores like Wal-Mart, Banana Republic, and the Gap will change your checks into an electronic payment as soon as you pay with them – that is why these stores will often hand your endorsed check back to you along with your receipt.

The dramatic changes in how we pay our bills have had a major impact on the Federal Reserve. In fact, the Reserve downsized its check-processing department. Since 2003 alone, the Reserve has closed over half of its 45 departments. The Reserve plans to cut down the department to just 18 offices by the end of 2008.

Of course, the need for writing checks is likely to remain for years to come. There are simply some services that do not accept credit cards, such as lawn care services. Similarly, writing checks is still ideal when making charitable contributions because it provides you with a record of the contribution made. Nonetheless, plastic is quickly taking over paper. There is nothing wrong with taking advantage of this convenience, so long as you remain aware of what you are spending and don’t allow your finances to get out of control.

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