Paying by bank check

[Michael B. Ross]

Barbara's question below about credit card statements reminded me of how dependent I am becoming on the internet. For instance, I pay 80% of my bills via bank check. In other words, I go to my account at my bank and tell them to send a check. Once the accounts are set up, the time required is very little. I have never had a problem.

Anyhow, how many of you pay bills via bank's check?

[Barbara Moulton]

Barbara's question below about credit card statements reminded me of how dependent I am becoming on the internet. For instance, I pay 80% of my bills via bank check. In other words, I go to my account at my bank and tell them to send a check. Once the accounts are set up, the time required is very little. I have never had a problem.

Anyhow, how many of you pay bills via bank's check?

I do. We don't call it bank's check, just online banking.

And I love online banking. I've been using it ever since it was available (maybe about three years?) and the only mistake ever made was my own (I accidentally clicked the wrong payee one month and sent my credit card payment to the cable company :-)

It has become much easier for me to manage my finances. Balancing my checkbook? Thing of the past.

I think the only cheques I write now are for my tithe.

It's wonderful.

[Glenn Harris]

Barbara's question below about credit card statements reminded me of how dependent I am becoming on the internet. For instance, I pay 80% of my bills via bank check. In other words, I go to my account at my bank and tell them to send a check. Once the accounts are set up, the time required is very little. I have never had a problem.

Anyhow, how many of you pay bills via bank's check?

I don't pay them via bank check but I do pay them via debit card automatic withdrawals which is the same thing. The only thing I pay by check is a car payment and that is only because the bank won't let me do online banking unless I have an account at that bank and as it's an Omaha based bank it's less trouble to write a check than it is to transfer funds into that bank just for the purpose of making the payment.

[Michael B. Ross]

Of course, Barbara. Online banking. For some reason, I couldn't think of that term when I posted. I, like you, love online banking. The only checks I write are one-time checks--example would be a plumber for repair. I use online for all my recurring bills.

I also have noticed that TPI is receiving a growing number of checks from a donors' banks.

The only time I messed up is when I authorized a payment but did not record it in my MS Money program.

I do. We don't call it bank's check, just online banking.

And I love online banking. I've been using it ever since it was available (maybe about three years?) and the only mistake ever made was my own (I accidentally clicked the wrong payee one month and sent my credit card payment to the cable company :-)

It has become much easier for me to manage my finances. Balancing my checkbook? Thing of the past.

I think the only cheques I write now are for my tithe.

It's wonderful.

[Hans Deventer]

Anyhow, how many of you pay bills via bank's check?

It's been many years since I have seen a check. I use online banking with direct transfers. Since a few years, even transferring money to other European countries is free of fees, provided you have the proper bank and account codes.

We used to have Eurocheques and girocheques in the Netherlands. In 1997, during a burglary, our girochecques were stolen and a little while later cashed in England. Thankfully, they were all assured, but it took 2 weeks for the money to get back. That was the end of us using cheques.

[Michael B. Ross]

Hans, I remember one shock to my misinformed patriotism was when I visited Europe and discovered much of the area is far more advanced technologically than the U.S. Someday, if we ever meet, I will tell you a funny story that happened in a parking garage in Frankfort's airport. I had never seen a system where you pay your parking fee at a window BEFORE you get to the exit. Anyhow, that is not what this post is about.

Help me with the direct transfer thing. If a plumber came to your house to fix a broken pipe, how would you transfer the fee from your account to the plumber's? How would you know which account to transfer it to, and would the plumber leave without knowing you had paid?

It's been many years since I have seen a check. I use online banking with direct transfers. Since a few years, even transferring money to other European countries is free of fees, provided you have the proper bank and account codes.

We used to have Eurocheques and girocheques in the Netherlands. In 1997, during a burglary, our girochecques were stolen and a little while later cashed in England. Thankfully, they were all assured, but it took 2 weeks for the money to get back. That was the end of us using cheques.

[Dave McClung]

It's been many years since I have seen a check. I use online banking with direct transfers. Since a few years, even transferring money to other European countries is free of fees, provided you have the proper bank and account codes.



Electronic Bank Checks, Debit Cards and direct transfers are slightly different on one issue -- "float." Only a few years ago, "float" was a giant issue in banking. It is still important. The term "float" refers to who gets the use of funds while a transaction is being processed.

With direct transfers and debit card transactions, the transfer of funds is instantaneous. On the day of the transfer, money comes out of the account of the person paying and goes into the account of the person receiving payment. Typically, the bank gets the "float" for that day because neither bank pays interest on the partial day.

When a bank check is used, whether or not the bank gets several days of float depends on the agreement of the bank. Many banks deduct the payment from the customer's account the day the check is issued. If that happens, the bank gets free use of the funds until the check is deposited by the other party.

My bank, USAA, doesn't withdraw the money from my account until the check is actually deposited. Typically, I get about 5 days additional use of the funds than I would get if I used a direct transfer.

With an individual, paying attention to the float only makes pennies a month of difference, but with big businesses it can amount to a lot of money. When I worked for a large construction company, we earned almost $100,000 a year by issuing our checks on a bank in a different city. It took a couple of days longer for the checks to clear the system.

Dave

[Michael B. Ross]

Dave, you are up early today. I had not thought of the float thing. I am going to check my bank's procedures, more out of curiosity than anything. You are right, the amount of interest on my checking funds is very, very minimal. But, I am wondering now if they "withdraw" the money when the check is issued or when it is cashed.

Edited to add: I just checked. I authorized a check for $118. on June 8 to pay a utility bill. The amount was withdrawn from my account the same day. So, the bank used my $118 for probably at least three days. At the checking account's current interest rate, that would mean they saved 0.006 cents of interest. Seriously, it is a great insight you gave when it involves large amounts.

Electronic Bank Checks, Debit Cards and direct transfers are slightly different on one issue -- "float." Only a few years ago, "float" was a giant issue in banking. It is still important. The term "float" refers to who gets the use of funds while a transaction is being processed.

With direct transfers and debit card transactions, the transfer of funds is instantaneous. On the day of the transfer, money comes out of the account of the person paying and goes into the account of the person receiving payment. Typically, the bank gets the "float" for that day because neither bank pays interest on the partial day.

When a bank check is used, whether or not the bank gets several days of float depends on the agreement of the bank. Many banks deduct the payment from the customer's account the day the check is issued. If that happens, the bank gets free use of the funds until the check is deposited by the other party.

My bank, USAA, doesn't withdraw the money from my account until the check is actually deposited. Typically, I get about 5 days additional use of the funds than I would get if I used a direct transfer.

With an individual, paying attention to the float only makes pennies a month of difference, but with big businesses it can amount to a lot of money. When I worked for a large construction company, we earned almost $100,000 a year by issuing our checks on a bank in a different city. It took a couple of days longer for the checks to clear the system.

Dave

[Dave McClung]

Dave, you are up early today. I had not thought of the float thing. I am going to check my bank's procedures, more out of curiosity than anything. You are right, the amount of interest on my checking funds is very, very minimal. But, I am wondering now if they "withdraw" the money when the check is issued or when it is cashed.

Edited to add: I just checked. I authorized a check for $118. on June 8 to pay a utility bill. The amount was withdrawn from my account the same day. So, the bank used my $118 for probably at least three days. At the checking account's current interest rate, that would mean they saved 0.006 cents of interest. Seriously, it is a great insight you gave when it involves large amounts.

I am in Texas today, so I am not up as early as it appears. I got up to work on my sermon for tomorrow. We are having a family reunion and I get to present the sermon.

I am preaching from two passages in the Sermon on the Mount. One says "Do Not Judge." The other says "You shall know them by their fruit." My challenge is to explain how one can examine fruit without judging.

Back to the "float" issue. Back when I entered law practice, float was a major issue. That is why most suburban banks resisted technology while the big central banks pushed it. Most Americans deposit their pay checks in their local bank. Their local bank has use of the funds until they are transferred to the banks used by merchants, usually the large city banks. Anything that lengthened the time it takes to get the money from the suburbs to the city was in the local bank's interest. Over the years, the big banks have perfected the technology so that paper is seldom an issue. Funds move from bank to bank instantly. Only in areas like "Bank Checks" do we still see the paper being relevant. If you observe your list of payees, you will note that some have agreements with the bank to receive electronic transfers instead of paper.

When I first started using bank checks almost all of the payments went out with paper checks. Now it is mostly doctors, dentists, and charitable contributions that actually get paper. All of the utilities and financial institutions get electronic payments.

Dave

[Hans Deventer]

Help me with the direct transfer thing. If a plumber came to your house to fix a broken pipe, how would you transfer the fee from your account to the plumber's? How would you know which account to transfer it to, and would the plumber leave without knowing you had paid?

Depends. If I am not a regular customer, and I wanted him for an emergency repair, he'll ask for cash. If I've asked him to remodel my bathroom, I'll get an invoice. It depends on the plumber really.

When I go to the garage for a repair on my car, I rarely ever pay it there. I usually get an invoice a few days later that I pay immediately through online banking. I've been a customer there for like 20 years, I don't even pay the cars I buy there until I get an invoice. I can take them home before he sees any money.

Now I don't make all that many transfers really. Most of the transactions are transactions I sanctioned but are initated by a company, like heating & electricty, mortage, insurance, road tax. Some are automatic transactions like my tithe.

And of course when buying stuff, we use our debit card with a code that we enter during the payment. There is a direct transfer at that very moment. Works in most shops. So my credit card is mainly for foreign payments, when I am abroad or ordering stuff on the internet.