Do Americans really use checks that often?

Question

That might sound a bit silly to people from USA but is it really that common to use checks in America?

I am from Austria and here (Austria, Germany, Switzerland) checks play practically no role in daily life. I haven't actually held a single check in my hands in my entire life.

So is it really common to get a paycheck in the sense that you get a piece of paper?

It would be nice if someone could explain the practice of "money handling" in America a little bit because I think it's really interesting how different cultures can be regarding money.

And I also have had the experience that most people believe that how it's done here, it's done in the whole world. :)

Edit:

I think it would only be fair if I just explain briefly how it is handled here. Maybe it's interesting to other people.

You usually have an account at your bank. Your payment as an employee is deposited there once a month. From there you can transfer money to other accounts. So instead of paying a bill by sending a check to the one getting the money you will send a form to your bank (or more commonly you will just go to the bank) ordering them to transfer money to the account of the other person.

Bills (esp. regular ones) are most often payed by issuing an "Einzugsermächtigung" (collection authorisation) and the companies will more or less just "take" the money from your account.

Today most people with a computer issue the transfer of money through the internet.

Answer 1

When you start at a new job here in the U.S., the default means of payment is usually a paper check. Most folks will quickly set up direct deposit so that their employer deposits their paycheck directly into their personal bank account - the incentive to do so is that you receive your funds faster than if you deposit a paper check. Even if you set up direct deposit on your first day on the job, you may still receive your first paycheck as a paper check simply because the wheels of payroll processing turn slowly at some (large) companies.

A counter example is a self-employed contractor - perhaps a carpenter or house painter. These folks are paid by their customers, homeowners and such. Many larger, well established contracters now accept credit card payments from customers, but smaller independents may be reluctant to set up a credit card merchant account to accept payment by card because of all the fees that are associated with accepting credit card payments. 3% transaction fees and monthly service fees can be scary to any businessman who already has very thin profit margins. In such cases, these contractors prefer to be paid by check or in cash for the simple reason that there are no fees deducted from cash payments.

There are a few folks here who don't trust direct deposit, or more specifically, don't trust their employer to perform the deposit correctly and on time. Some feel uncomfortable giving their bank info to their employer, fearing someone at the company could steal money from their account. In my experience, the folks who prefer a paper paycheck are often the same folks who rush to the bank on payday to redeem their paychecks for cash. They may have a bank account (helps with check cashing) but they prefer to carry cash.

I operate in a manner similar to you - I use a debit card or credit card (I only have one of each) for nearly all transactions in daily life, I use electronic payments through my bank to pay my regular bills and mortgage, and I receive my paycheck by direct deposit. There have been periods where I haven't written or received paper checks for so long that I have to hunt for where I put my checkbook!

Even though I use a debit card for most store purchases, the bank account behind that debit card is actually a checking account according to the bank. Again, the system defaults to paper checks and you have the option of going electronic as well.

Before we judge anyone who doesn't use direct deposit or who prefers to be paid in cold hard cash, consider that direct deposit is a luxury of stability. Steady job, home, etc. Direct deposit doesn't make sense for a contractor or day laborer who expect to work for a different person each day or week.

I don't think this is all that unique to the US. There are people in every city and country who don't have long-term employment with a single employer and therefore prefer cash or paper check over electronic payments.

I'd be willing to bet that this applies to the majority of people on the planet, actually.

Answer 2

In my business (estate planning law practice), probably 60-70% of my income is in the form of checks, with the balance as credit/debit cards. I prefer to get paid by check so I don't have to pay the approx 2.5% merchant fee, but I don't push clients to choose one method over the other.

I offer direct deposit to my employees but most of them choose to be paid by check.

Also, check processing is becoming more and more electronic - when I get paid by check, I scan the checks in a dedicated desktop scanner, and upload the check images to the bank at the end of the day, and the checks are processed very quickly. I also make deposits to my personal credit union account by scanning checks and uploading the images.

So, yes, there's technically a paper check, but I (as the merchant/recipient/depositor) keep the check for a few months to make sure there's no problem with the deposit/payment, then shred them. The bank never sees the actual paper check.

Answer 3

A very interesting topic, as I am moving to the US in a month. I realise this thread is old but its been helpful to me.

My observations from my home country

"Before we judge anyone who doesn't use direct deposit or who prefers to be paid in cold hard cash, consider that direct deposit is a luxury of stability. Steady job, home, etc. Direct deposit doesn't make sense for a contractor or day labourer who expect to work for a different person each day or week"

--- well here a contractor would still be paid by a direct deposit, even if he was working for many different people. On the invoice the contractor provides Bank account details, and customer logs onto their internet banking and pays electronically. It is a a very simple process and is the preferred method of payment by most businesses even small contractors. Many accounting software programs are linked to bank accounts and can quickly reconcile accounts for small business. Many businesses will not accept a cheque in Australia anymore as they are considered to be a higher risk.

I started work in 1994 and have never received any payment except via direct deposit.

Answer 4

Sorry for this late reply. I currently live in Iceland (I am a United Statesian). People here told me they thought checks were just something that were in movies. I was amazed by this. So here are some reasons that I see to being why it works still in the usa. 1. Social Security system. Most Euro, Nordic countries have their lives, bank accounts, ect tied to their 'Social Security' number and that number is not top secret like it is in the USA. In fact here in Iceland you throw your number around to anyone who wants it because they cant do anything with it but pay you money really. 2. Banks. In the USA there are millions, MILLIONS of small town banks. That means that doing direct deposits or transfers is much much harder to achieve. Example: Iceland has two banks. The most common way of loaning a friend money or paying for that hotel room if you forgot to bring cash or your card is to say 'Give me your SSN and I will transfer to you'. It takes about 30 seconds to do a funds transfer. In the USA you can't do that. They would think you are lying or not want to give they bank info or because of the fees from small town banks it would be pointless. Also a lot of these small banks will not accept direct deposit (I had a bank growing up that still does not)

These are some of the main reasons that I think cause the flow of checks in the usa.

Answer 5

I know this an old thread, but one that caught my interest as I just moved to the USA from Australia. As per the OP I had never written a check in my whole life, and upon arriving in the US I was surprised as to their proliference. In Australia pretty much all bills you receive can be paid in a number of ways:

• Using "BPay". Your bill will have a BPay biller code, which identifies the biller, and a reference number on it, which identifies your account with the biller. To pay a bill using BPay you use internet or phone banking, enter the numbers from the bill and the amount and your done. This is my favourite option.
• Set up a "direct debit", where you give the biller your bank account details and they take the money out of your account. Much like "Einzugsermächtigung" that the OP described.
• credit card
• cheque

For small amounts between friends cash is probably used most, but for larger amounts direct transfer is popular. Your friend/landlord will give you their bank account number and BSB number, which identifies their bank, and then you transfer the money in. We don't have a SSN like some other countries. Cheques are still used by some however, esp by the older generations.

Now that I'm in the US initially I had tried to set up direct transfer to pay my rent however the bank has a $1000 daily transfer limit. I contacted the bank to get this increased however I was informed that this limit applies to ALL accounts at the bank. I asked how do people pay their rents with this low limit and was told that most people used cheques. (This explains the strange look I got from my landlord when I asked for their bank account details so I could pay the rent!)

I now have some bills to pay here and I use online banking. You enter the biller's name and address and then the bank actually prints off a cheque and posts it to the biller on your behalf! My first couple of pays here were also cheques, which were the first actual "paychecks" I had ever received.

Answer 6

I still use checks to pay rent and occasionally some bills/liabilities.

That said, I did notice an (elderly) lady paying by check at the supermarket a while ago.

So is it really common to get a paycheck in the sense that you get a piece of paper?

Yes and no. There are some people that opt for the physical paycheck. Even if they do not, there is a pay stub which serves as a record of it. My last employer went to online pay stubs and a bunch of us opted out, sticking with the good old paper in an envelope. We sure were glad of that when there were technical issues and security concerns with the online service.

Answer 7

I receive checks from my tenant. Also, from our medical reimbursement account. I'm sure there's an option somewhere to get that direct deposited, just haven't yet. My wife will write checks for school functions. Funny, they haven't cashed one since february, and this is the one item to look for every time I reconcile her account. A few select others don't take credit or debit cards. Our tailor (losing weight, needed pants pulled in), among others. The number of checks is surely down an order of magnitude over the years, but still not zero.

Answer 8

Typically your paychecks are direct deposited into your bank account and you receive a paycheck stub telling you how much of your money went where (taxes, insurance, 401k, etc.).

Most people use debit or credit cards for purchases. I personally only use checks to transfer money to another person (family, friend, etc.) than a business. And even then, there's PayPal.

Answer 9

There are some people that still get an old-fashioned paycheck but for the most part if you are an employee at a company you get a paystub while the money is direct deposited into your accounts. Paying for stuff at a store with a check is not very common. Most people use credit cards for that purpose. A significant percentage of the population still use checks for paying there regular bills through the mail. Although the more internet savvy people will most likely use online bill pay from their bank so they don't have to mail checks. Personally I have only written about 15 checks in 5 years. Mostly to people and not to businesses setup for receiving bill payments electronically.

Answer 10

Many small businesses are still cash and check. For example my landlord does not take credit card or online transfer.

My choices are cash and check, and I prefer checks for the paper trail.

Answer 11

People who rent an apartment will typically pay by check. Probably 90% of the checks I have written are for rent. To some extent this falls under the previously mentioned "payments to another person" rule.

Answer 12

Ever since my apartment complex started accepting rent payments online, I've almost never written a check. I use my debit card for everything. And I get paid by direct deposit.

Answer 13

It is possible to not use checks in the US. I personally use a credit card for almost everything and often have no cash in my wallet at all. I never carry checks with me. If we wanted to, we could pay all of our monthly bills without checks as well, and many people do this.

30 years ago, grocery stores didn't generally accept credit cards, so it was cash or check, though most other kinds of stores and restaurants did. Now, the only stores that I have encountered in years that do not accept credit cards are a local chicken restaurant, and the warehouse-shopping store Costco. (Costco accepts its own credit card, but not Mastercard or Visa.)

Still, we do pay the majority of our monthly bills via check, and it would not be shocking to see someone paying for groceries with a check. I can't name the last time I saw someone write a check at a store exactly, but I've never seen any cashier or other patrons wonder what a check-writer was trying to do. Large transactions, like buying a car or house, would still use checks -- probably cashier's or certified checks and not personal checks, though.

Answer 14

From a Canadian point of view, I think we are generally very similar to how you describe Austria. The only thing I use cash for, is to pay for my coffee at a local micro-roaster who only accepts cash. Cheques, I only use to pay friends. Everything else is debit or credit card. Very few businesses around here will even accept cheques anymore.