Do You Still Carry a Checkbook?

This old-school form of payment is rapidly falling out of fashion.

For many millennials, the task of writing a check is as foreign as going to a bank teller to make a deposit. Debit and credit cards now handle most purchases, while smart phones, advanced ATMs and personal computers are the tools used to handle routine banking tasks. There is growing evidence that the art of writing a check is becoming lost among younger generations.

In fact, older Americans write more checks than younger ones. A 2009 study by the Federal Reserve Bank of Boston showed that Americans in the 65+ age group wrote twice as many checks as those in the 25-34 age group (49 percent vs. 24 percent).

With fewer checks being written, filling in the blanks has some folks asking how to do it. Interestingly, Google has had hundreds of thousands of search inquiries on how to write a check. That wasn’t the case when America was in its formative years.

historical checks
Abraham Lincoln check-1861 (Top); Davy Crockett check-1834 (Bottom)

The PNC Bank Legacy Project has a check written in 1861 by President Abraham Lincoln to his son William. There also is an earlier check written by pioneer adventurer and Congressman Davy Crockett in 1834.

A Check History Lesson

People don’t write checks just because they’re older. But, the use of check alternatives partly has played out along age-group lines. Checks once accounted for most of all non-cash payments. But, in recent years their use in the United States has plummeted.

After the end of World War II, newly affluent Americans adopted check writing like never before. The number of checking accounts in the U.S. doubled between 1939 and 1952, rising to 47 million. By 1952, people were writing eight billion checks each year.

During that time, checks were processed by hand. According to one study, about 28 million checks were written every day, with each check passing through an average of 2.5 banks to be processed. Unless a check was deposited at a bank that was also the home to the check writer, it had to be sorted by hand and counted at least six times before it was cleared.

A solution to the growing check processing burden was introduced in 1955 when magnetic ink and those funny looking characters began to be printed at the bottom of checks. This enabled early computers to read and process checks. That system became the industry standard in 1967 and helped drive check processing times down to two days during the 1970s. The number of checks written surged to nearly 33 billion by the end of 1979 and accounted for about 86 percent of all non-cash payments.

Check writing continued to grow into the mid-1990s when it topped out at an all-time high estimated to be 49.5 billion in 1995.

At its peak, PNC contracted with a company that had a fleet of 162 chartered jets stationed at various airports that would fly bags of paper checks and deposits around the country so they could be delivered to the originating banks by noon the next day. If there was bad weather or mechanical issues, the checks stayed grounded.

That time also marked the point where other forms of payments like debit and credit cards, electronic payments and automated clearinghouse (ACH) transactions began to gain traction.

Going Digital

The 9/11 terrorist attacks in 2001 were among the key events that pushed check processing from manual to digital. Immediately after the attacks, all air traffic in the United States was grounded for days. That put banks at great financial risk. “We had to credit customers’ accounts when they deposited checks, but we weren’t able to clear those processed checks to the originating banks,” said Doug Lippert, operations director at PNC Bank. “Banks absorbed that risk.”

The result was the Check Clearing for the 21st Century Act, known simply as Check 21. It’s a federal law designed to enable banks to handle check processing electronically.

Tracking the Check Decline

Since 2000, the Federal Reserve Board has conducted payments studies. The recently released 2016 study shows consumers wrote nearly two-thirds fewer checks per household in 2015 than in 2000. The number of checks written per household fell from about 19 per month in 2000 to about 7 in 2015. Checks written by businesses also have seen a steady decline, falling on average from 66 checks per month in 2000 to about 24 checks per month in 2015.

The Fed study notes, however, that the long slide of check payments appears to have tapered off somewhat, with the annual rate of decline by number dropping to 4.4 percent from 2012 to 2015 compared with 6.3 percent from 2000 to 2012.

The Federal Reserve study shows that debit cards are leading the pack in the volume of transactions, with 48 percent of all non-cash payments. Credit card use also continues to rise, up nearly 7 billion transactions since 2012.

What Does the Future Hold for Check Writing?

Using paper checks is in decline, disrupted by digital payments, the Internet and smart technology. Even the government is moving away from checks. In 2013, the Treasury Department stopped mailing checks to Social Security recipients. Now they get their monthly funds through direct deposit or a debit card.

Why have people stopped using checks? It might be because of the more convenient digital banking and payments alternatives now available. It also may be because it’s a chore to carry a checkbook and pen, having to fill in the blank spaces on a check and then actually sign your name on the bottom of the check without making a mistake.

changes in noncash payments

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Changes in the number of consumer noncash payments by type, per household, per month, 2000-2015
Source: Federal Reserve Board

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Changes in the number of consumer noncash payments by type, per household, per month, 2000-2015.

  • Debit Cards: 38.4
  • Credit Cards: 6.9
  • Checks: -12.2
  • ACH: 5.1

Source: Federal Reserve Board

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