Posts Tagged ‘checks’

What is the routing number on your checks?

Monday, January 11th, 2010

There are a ton of numbers and information on a check that can make it confusing to use or even to understand. One of the most important things to know about your check is the routing number. If you are looking at a check, the routing number is the 9-digit code in the bottom left corner.

The routing number is important because it is used to set up direct deposits and other electronic transfers into your checking account. It identifies the banking institution where your money is held, as well as your specific account.  This can be getting a paycheck directly deposited into your account (as opposed to having to deposit it yourself… manually… at a bank…) or having someone (like your parents) transfer a monthly allowance. In essence, it is the number that makes sure the money gets to the right place!

Does anyone use paper checks anymore?

Tuesday, December 22nd, 2009

While the ten-pack of free checks might seem a bit much, don’t throw them away just yet. Checks are playing a diminishing role in everyday life, but they still have their uses.

In the past, paper checks were the preferred method for paying for large purchases, getting paid, sending money, paying bills, etc.. But now when you walk into a store, the most likely thing coming out of your wallet is your debit or credit card. Getting paid? Companies can now directly deposit into your checking account without you ever having to go to the bank. The reason for the shift away from paper checks is simple – ease of use. Writing a check can be a hassle: it takes time to fill it out, you have to go to a bank to deposit one, and you always have to order more. For these reasons and more, banks have mostly transitioned to electronic forms of check processing and even utility companies are now accepting credit/debit card payments.

Even though paper checks are definitely on their way out, they still serve some vital financial roles. Checks are a great way to securely send large sums of money to individual people. If you are renting an apartment, for example, you’d be very lucky to find a landlord that would accept a credit card to pay rent. It’s not hard to imagine though, that soon this process will be replaced by an easier electronic method.

While paper checks will probably one day become extinct, you’re still likely to find yourself digging them out once a month or so.

Can a check float?

Friday, September 25th, 2009

While checks do have to obey the laws of gravity, they’re in suspended animation in another sense. A check is basically an IOU. You write someone a check, he or she redeems that check later for cash, and the payment is taken out of your account. Credit cards work in much the same way – you pay for a purchase with your card, and the bill is charged to your account and paid later on.

“Float” is that period of time when a check or credit card charge is in limbo. It’s the time between the moment you write the check and the moment payment is actually received or the moment when a purchase is first charged to your credit card to the moment you pay that bill. During float, the check or credit card charge is, in a sense, suspended. It’s not really performing a function at the moment, but its existence represents a transaction that will have to happen sooner or later. Some people float checks in order to buy time until sufficient money to cover the check appears in their bank account. If this actually happens, great. But if not, the check will bounce and some nasty fees (from the bank and often from the recipient of the check) will start to pile up.