Will banks soon charge for using checks?
December 06, 2011
As banks continue to look for ways to increase profits on checking accounts, don't be surprised if they make a pitch to convince you to use their online bill-payment services.
Online bill payment saves banks the expense of processing paper checks. In fact, experts have estimated that customers who rely on online transactions for their checking accounts typically cost a bank about $170 less per year than customers who rely on checks.
Most banks long ago stopped sending back cancelled checks for free every month, and many banks are now starting to charge customers who want monthly paper statements of their checking account activity. Could this mean it's only a matter of time before banks start charging customers who want to write paper drafts on their checking account?
Online bill payment gains steam
The problem is that although online bill payment is convenient, only about half of checking account customers with Internet access use their bank's bill-payment service. Although that number is growing, 25 percent of bank customers still like paying bills with paper checks by mail, and the rest make payments directly to their company--either online, by phone or in person.
Despite the increasing popularity of online bill payment services, some consumers worry that the system isn't safe from hackers or that they could face late fees or dings to their credit rating if they improperly set up a payment.
Curiously, those who swear by online bill payments often say they don't like to mail paper checks for the same reasons. To them, putting a check in the mail heightens their risk of fraud or inexplicable late payments.
The perks of online bill payment
There are a number of advantages to online bill payments:
- It gives you an electronic record, backed up by a third-party record-keeping system, that you paid a bill on a certain date and for a certain amount.
- You can quickly see how much you paid on an account on previous occasions, and it's easy to look up account numbers and get contact phone numbers.
- You can set up automatic payments for certain monthly bills that are always the same, such as your mortgage or your car payment.
- Some bill pay services deliver your bills directly to your electronic account, where they can't get lost like mailed bills that get left in the car or accidentally thrown out.
- They save you from hunting for stamps, remembering to mail your bills and paying to order new checks regularly.
Are paper checks going to be worth an additional monthly expense to customers? If current trends continue, the answer is probably no. Many will likely switch to online bill payments if their bank starts dinging their checking account each month with a fee for paper checks.
But after they get used to it, they may wonder why it took them so long to switch.
