Forget the Check
Howard Rohleder | Dec 10, 2023
THE HOLIDAY SEASON used to be a time when we’d write and mail more checks than usual. Some were gifts to family, while others were year-end charitable donations. But with the rise in mail theft and check washing, we’ve been on a campaign to limit the number of checks we write, plus we’ve almost eliminated the mailing of checks. Here are eight things we’ve done to reduce our exposure to check fraud:
- We opened a secondary no-fee checking account and opted out of the overdraft protection. We keep no more than $500 in that account and use it for any check that has to be mailed. It’s linked to our primary checking account, so we can quickly replenish it with an online transfer whenever necessary.
- Either our primary checking account or a credit card is used for all bill payments that are either automatic deductions or electronic payments that we initiate. All automatic credit card payments are through one card that never leaves our house.
- We bought gel pens that we use for checks that are to be mailed, since that ink is harder to “wash.”
- We drop any mail that includes a check into the slot inside the post office. This doesn’t prevent an “inside job” perpetrated by a postal worker, but it cuts out the risk of theft from publicly accessible boxes.
- We balance our checkbook each month, monitoring the account for any unexpected activity.
- We enrolled in Zelle through our bank to send and receive payments, and had our adult children do the same. Zelle should only be used if you know and trust the payee because, once the money is sent, it isn’t retrievable.
- We have also used PayPal for transactions. PayPal and similar services are best for situations where you don’t know or don’t have a trusted relationship with the payee.
- We’ve moved to using a credit card to make online charitable donations. I realize the charity has to eat some fees, but that’s better than the charity not receiving the check at all. We use a check for local donations when we can deliver it by hand.
Before this latest campaign to limit the chances of fraud, we’d already converted most of our routine monthly bill paying to either electronic funds transfers or credit card payments. I also eliminated snail mail delivery of as many bills, bank statements and investment statements as possible. Now, you won’t find much in our mailbox except junk mail.
In the past 12 months, we’ve written just 11 checks. Six were handed over to the payee in person—three to the dentist, one gift and two charitable donations. Of the five that were mailed, two were payments for local taxes; I’ve since enrolled in online payments.
You might think gift cards would be a good option for gifting. Since they can’t be “washed,” at least your loss is limited to the value of the card. On the other hand, they’re effectively cash without having the hassle of needing to be washed. My brother-in-law, who lives out west, has had two greeting cards to his grandkids disappear on their way to Ohio. Both included gift cards. We’ve now explained the merits of Zelle to him.
Read more by Howard Rohleder
Interesting. I must be naïve because I mailed a gift card as well as a $20 bill yesterday. I am not blind to the fact that some postal worker could make off with either or both. They probably have x-ray machines. I also have little concern about check-washing. I assume when I get burned on one of these things, I’ll change my tune. I did notice the post office no longer has the outside mail boxes. My office complex still does, so I use that box.
A great article.
I also don’t write that many checks anymore. Mostly for local or state services that charge a convenience fee for online paying, like the local water bill and the state driver’s license/registration renewal. I used to write one for the annual property tax bill but now I can do an electronic check that comes direct out of my checking/debit account with no fee. I just have to enter my bank routing and account number which are on a paper check anyway.
I also use multiple accounts. One for direct deposits, one for cash, and one for a debit card. Any checks or online payments come out of the debit account, in which I just keep enough to cover any bills or checks plus an extra $300. I always try to use cash whenever possible so the extra $300 is there in case I find a great deal or something on closeout. Also, since I always try to keep the $300 balance, the account sort of auto-balances. I can tell right away when all the payments and checks clear as there should be an even $300 left, if not, then I check it out right away.
A debit card can also be used as a credit card. In fact, my bank encouraged me to use it that way so I wouldn’t have to use the pin. At most places when the system asks for you pin just hit the green return key and the system will use it as a credit card. If not, and you’re at a checkout with a person, ask them what key to press to by-pass the pin. The bypass key color has changed on some of the newer automated checkouts. I’ve only had it happen once so far.
Thanks Howard,
Maybe this has been mentioned, when picking out a gift card carefully look at the barcode to see if it is shiny and not a paper copy. Crooks will take cards, copy the barcode and put it on a non valid card. Seal the paper card holder back up and wait for the barcode to be activated. They have the actual card so use it right away.
Sadly, the person getting the ‘gift card’ will not have anything.
This continues to happen from a grocery store in Denver that is a national chain. They are powerless to stop it so, the purchaser beware.
Who writes checks any more????
We only have one commercial account (a national health club chain to get the monthly discount) connected to our bank accounts so if there is a problem we know where to look. Our mutual fund company is the only other business that is connected. All other bills paid with credit card. I had a check forged on my account by a roommate in my 20s and the bank was responsible for reimbursing my account. Is that no longer the case?
Regarding #8, consider opening a donor advised fund (DAF). I did so a few years ago; compared to credit cards and checks, granting from a DAF is easier and the charity receives the full value of the gift. Vanguard and Fidelity (and others?) require no minimum amount to open a DAF. As for fees, they can be minimized too. Mine are less than I would otherwise pay annually for postage and checks. Other great features include facilitating the donation of appreciated securities; ease of record keeping; ready access to research on individual non-profits; automating reoccurring contributions; and the ability to give anonymously (or not).
You might want to check out http://www.daffy.org for DAF management (be sure not to try daffy.com). They have really low fees and options for investing your contributed cash while awaiting your requests for distribution.
Vanguard requires $25,000 to open a DAF:
https://www.vanguardcharitable.org/giving-with-vc/fees-and-minimums
Fidelity has no account minimum, but charges a minimum $100 annual fee, on top of fund expenses, so an account with less than $10,000 would be exorbitant:
https://www.fidelitycharitable.org/giving-account/giving-account-details.html
Schwab’s fee schedule essentially matches Vanguard’s, except that they do not have an account minimum. Up to $500,000 account balances, the fee is 0.6% annually including the fees in the core investment choices. For $10,000 that would be $60.
https://www.schwabcharitable.org/features/fees-and-minimums
The Dayton Foundation, a community foundation provides a Charitable Checking Account (Donor Advised Fund) with no fee and no minimum. No interest on the account but it is free. Minimum grant is $15.
The Dayton Foundation: Becoming a Donor – Apply for a Charitable Checking Account
Zelle has had fraud issues and your protections can be minimal vs.a checking account or credit card issue.
https://www.nytimes.com/2022/03/06/business/payments-fraud-zelle-banks.html
When I used to run, I passed by a mailbox whose contents were dumped in front of it. It appeared that someone had gone through the mail waiting for the postal carrier to pick up, taken what they wanted, and dumped the rest on the ground.
After that, I made sure to never leave outgoing mail in the mailbox over night. We put the mail in the box the morning we want it to go out. That doesn’t provide ironclad security, but it removes one of the easiest avenues to theft.
Our local mail box removed all outside collection boxes due to theft.
Great article Howard, we’ve adopted most of these strategies ourselves. Check-writing for us is now mostly a thing of the past, for all the reasons you mention (and a few more).
Here’s another item to keep in mind: When using electronic payment services such as Paypal, be expecting to receive a 1099-K when amounts exceed $600 next year. This congressionally-mandated rule was supposed to be implemented in 2023, but was postponed by a last-minute ruling in Dec. 2022. And now, yet another last-minute IRS ruling (in Dec, again!) apparently stayed this requirement (again!) until 2024.
That is only for payments deemed as goods and services. Payments to friends and family don’t count.
Great piece on a timely topic (sadly). We’re following the same playbook. Wondering how this story will end? Will check-writing finally die out before banks add new security features to checks?
Thanks for the tips Howard. Re item#2, we also have many payments set up to be automatically charged to a credit card. We used to use it for almost everything else too, as it has a good rewards scheme. Lately though, we’ve stopped doing so, as the potential pain from having it compromised and having to fix all those automatic payments outweighed the rewards. It’s also a good case for not carrying it at all, so we’ll think about that.
Yes! The thought of having to change those automatic payments is daunting. I use the same card for auto pay and my online purchases (eg Amazon) but it never leaves my desk. Even so, it was compromised once… There may be merit to having a card for auto pay and another for online purchases???
After Citibank twice reissued my card because of problems on their end I moved my automatic credit card deductions to a Capital One card that lived in my desk except when I was traveling. Never had that kind of issue with CapOne.
Good summary We have done many similar things. All our routine bills, utilities, internet and many others are taken directly from one designated checking account.
With very few exceptions any checks we send I do online and let the bank send their check. I can’t remember the last time I wrote a check.
As you mention Zelle is very handy.
Every time a debit or credit card is used, the bank sends a text and also tells me if an account balance is above or below a limit I set.
Each month eleven 529 plans take money from a bank account and each time our bank tells us it looks like we made duplicate payments.
We have been subject to fraud several times. Once our card was used to purchase $25,000 of industrial equipment in Kentucky. My favorite was our debit card used at a McDonalds in Brooklyn. How one uses a debit card without the card is a mystery. Another time using our card number was attempted at a jewelry store in London. Each incidence was resolved without hassle by the bank.
I have often found that bank issued payments are checks with my account numbers on them that are mailed. Very convenient but still an exposure to potential fraud.
I really wouldn’t want all those alerts. I check all my accounts bi-monthly and consider that sufficient. The only times I’ve needed a new card because of fraud it was the issuing company’s fault.
I was reluctant to set up the alerts, but did so after I was a victim of check washing. I thought it would be annoying, as you suggest. But it really hasn’t been. I soon as I make most transactions, I get an alert and immediately delete the notification. It’s the out-of-the-blue alerts that I pay attention to — and the ones most likely to signal a problem.
I have also set up alerts with the bank and credit cards. As you have found, I expect the bank will eventually make good on any fraudulent charge, but it is the time and hassle I want to avoid.
Howard, thanks for an interesting and informative article. It sounds like you have adopted a sound process. We have not adopted #3 and 6, but I’ll be on the lookout for gel pens. Is Zelle a better option than Venmo? Most of our family has settled on Venmo, and we’ve used it with family and some for some other payments outside the family.
Same. My hairstylist wants Venmo, coworkers collecting for baby gifts, my siblings when wwe travel or eat out together and pay each other for things, etc. In my current experience, friends and family use Venmo and businesses use PayPal. I’ve never used Zelle, though I think I have it available on my credit union account.
I was recently given a choice of Venmo or Paypal. After checking I went with Paypal, Venmo appeared insufficiently secure.
I have not used Venmo. We have a friend that we need to exchange money with occasionally and he was using Zelle, so we went with it on his recommendation. He was also the one to clue us in on using it with our adult children.
Venmo is quite good, very useful these days. Business is owned by PayPal. We use Zelle, too. Each has its strengths.
https://www.forbes.com/advisor/money-transfer/zelle-vs-venmo/
Thanks
This is a nice summary of Zelle vs Venmo. For my purposes, I think I was right in choosing Zelle.
Thanks for this article. I used Venmo when I had my tax practice and it worked well. Now Zelle will make more sense because I can access from my bank.