Buying a money order can be a pain and in most cases it’s not free, why not just have their own checks?
You know what, when I first heard(on these boards as a matter of fact) about people paying bills by sending cheques my reaction was something along the lines of 
:eek:.
Here in Sweden(if I’m not mistaken this is also where Floater and Henrichek are from) bills are paid exclusively via giro. If I were to run in to a business or organization that can’t accept payment this way I would be very surprised.
The US is reducing the number of check clearance centers down to 1 ,not sure when that will happen. Right now there are 5 or 6.
I’ve noticed in stores the most likely people to still use checks are people over 60.
For all its wealth, the USA is surprisingly primitive in many ways – one of these ways is the banking system.
In the UK, personal cheques are virtually dead already. Free, fast electronic payment is standard, and as mentioned it typically clears in a few hours.
When I moved to the US, I was shocked by many things in the banking system: though this is changing, current (‘checking’) accounts standardly charge a monthly fee, there is no truly national bank, cash machines (and your home bank) will charge you to use the cash machine of another bank (this doesn’t happen in the UK), and paper cheques are ubiquitous.
Example: my landlord is a medium-sized one, managing a few dozen or hundred properties. They have a couple of full-time staff. But the only way to pay my rent is to write a paper cheque and deliver it to them: they don’t like cash, and they don’t take electronic payments.
(I could use the laughable ‘BillPay’ system, where for many recipients the bank will electronically write a paper cheque and send it in the post…).
In sum: getting rid of paper cheques on this timescale would be unthinkable in the US. In the UK, it’s not a big change.
pdts
There is a cost to cheques. The recipient has to go to the bank to deposit them. The bank has to send them to a central clearinghouse to be credited to the issuer’s bank. Processed cheques have to be stored for a period of time. Sometimes people bounce cheques. All these things are costs that can be significantly reduced by going electronic.
Once cheques are no longer handled by central clearinghouses, the costs of using cheques would significantly increase, causing a further decrease in the use of cheques.
Fortunately, here in Canada we have an alternate monetary system that is quite popular for daily transactions: Canadian Tire Money. Now Canadian Tire does not like people using Canadian Tire Money as general tender, but then again, how many Canadian corporations have their own federated bank, the Canadian Tire Bank? Coincidence? I think not. It’s just a matter of time . . . . 
Now, that just seems bizarre to me, that the bank will generate a cheque rather than just doing an interbank transfer. Even for one off expenses I would send money via online banking - it’s a lot easier than writing a cheque, finding an envelope and a stamp, and going out to a post box (and having a friend wait 4 days before they actually get the money).
I am talking about using checks vs. money orders. Not check vs. electronic payments. I know that electronic is way easier.
They do an electronic transfer to those that can receive them. I pay most of my bills that way – credit cards, phone bill, electricity bill, etc. However, my friend can’t recieve electronic payments, and neither can small clubs, nor my house cleaner. So for those the bank, as I said, just prints its own paper check and puts it in the mail. Also, the monthly fee for my homeowners association is like that as well, and for that I HAVE gone through the trouble of setting up automatic payments from the bank, even though it’s not electronic.
I actually don’t need to know about this; the bank automatically decides whether to send the payment electronically or through the mail. They know which recipients can accept electronic payments and which can’t.
My guess is that there would be one heck of a large user fee for cheques and money orders if there were no clearinghouses.
It does seem like the US banking system is behind many other places. Not sure about other countries but in the US even now there are a lot of people who still don’t use a bank or credit union. The biggest group is illegal aliens , they think a bank can help them get deported. They keep a lot of cash at home and because of that they are often targets of robberies.
Money orders are no great shakes either. I sent a US Postal money order to Citibank. Citibank says they never got it. It took the US Post Office about 14 months to give me a new one.
Probably off in some train station master’s cubbyhole in southern Colorado. 
That’s nice. I write maybe 75 per year. Other people have different needs.
No, I don’t pay in stores with them. The main things I use paper checks for are as follows:
–Stuff for my kid’s school and activities.
–Payments between my ex-husband and I. Example: payments for my son’s after-school program are automatically debited from the ex’s account. I give him a check for my part. Yes, I could do that through the bank, but it takes forever for the checks to arrive in the mail.
–Money transfers between people where other forms of payment are inconvenient.
–The occasional small vendor, like at a craft fair or something.
I don’t carry a checkbook in my wallet, but I always keep a few checks in there. I replace them so much that I might as well carry a checkbook.
Yeah. I find this totally bizarre too.
I looked into that with regard to the payments between me and the ex. Between the types of payments described above and his child support payments, at least 8 checks per month go between us. It absolutely blows my mind that the bank wants to deal with all that paper and pay for the envelopes and postage for the ones that are generated automatically.
The weirdest part of my ex and I not being able to do inter-bank transfers: They wouldn’t be inter-bank transfers! We both bank with Chase! At the same branch!! :rolleyes:
Here in NC the state required their employees to get paid via direct deposit and a decent number of people complained since they had no bank account. They were forced to open an account or not get paid. Most joined the state employees credit union which has free checking.
How interesting. If I may ask a question, which hopefully will not derail the thread too much, under what circumstances would you normally get a bank account in the US? In the UK, I have had a bank account since I was roughly 9 years old. Money from grandparents, friends, christmas etc, it all went in there. What are the reasons behind avoiding setting up a bank account in the US?
In Australia it seems that many banks charge monthly fees for keeping your money in them. I find this concept totally alien, is that really the case in the US too?
I think that you will find that a lot more people than you think don’t have bank accounts in the UK as well. In general in the US you can get a free checking account with a major bank if you keep $500 to $1000 in the account or have automatic deposit from you job. If you don’t meet the above then there is a fee.
There are also credit unions which will generally have very low minimum balances before fees apply.
Almost all middle class kids in the US will have some king of bank account by the time they are teenagers.
US resident here, I’ve had largely the same experience as you. I was encouraged to set up a bank account when I was young for those same purposes you mention.
It’s true that some bank accounts charge a fee, mostly for “premium” checking accounts, but most of these will waive it if you keep your balance above a certain amount. So avoiding fees or confusion regarding whether there will be fees is one factor.
Another I can think of has been mentioned, and that is for illegal aliens or other people who wish to hide their identity as much as they can. I doubt most drug dealers ferry large amounts of money in and out of bank accounts either.
Aside from those, I am very confused as to why people do not open bank accounts.
Besides illegal aliens, the other big US group without bank accounts is poor people. Some of them even pay their bills such as power, water, gas, etc in cash. They can go to the office of the company to pay in cash or else go to a few other places.
Also people who want to avoid taxes might have a bank account but prefer to work with cash since that cannot be traced.
I am charged in Sweden as well (the grand total of 6 SEK/month). My take on it is that all banks get their money from the customers, some do it in different ways to others. In the UK for many years the banks took the piss with penalty fees for the likes of unscheduled overdrafts. That briefly changed a year or so ago but I believe the banks won in court in the end. So here in Sweden the penalty charges aren’t so high, so the bank makes money by charging a nominal fee for everyday things like actually having an account.
Many banks will also waive fees if you set up automatic deposits, like your payroll check.