'hidden' benefits of cheque (v debit card)

Walletwatch

This is definitely an interesting thread, and while I don't think I'd stop using debit cards and start issuing cheques for my shopping at supermarkets, this is indeed a very good way to get back some of the money Banks make on floats when we try to transfer money between banks. Of course, in this case, the Banks don't lose if the merchant cashes in the cheque late, it is the merchant himself.

Having said that, this practice of issuing cheques to take advantage of the float may actually prove counter productive if :

(a) You are not very organised with your finances, i.e. you don't keep provision in your account balance for cheques issued by you.
(b) Your account is near zero-available-balance very often.

In the above cases, you run the risk of incurring charges for running up an unauthorised overdrawn balance. Also, because you take advantage of these chqs hitting your account late, if you don't check your statements carefully, you may miss any stray debits that may occur due to fraudulent cheques for innocent looking amounts, that you may dismiss as one of those issued for shopping.

buses7675

Hi All,

I have to agree on the side of the people using CCs, rather than chequebooks!

1 - I like to be able to see when something has been taken from an account (which you can do easily most CCs online)

2 - with CCs you get between 56ish days and a minimum of about 14 days between a transaction and having to actually pay for it

3 - with CC online statements, the company who made any particular transaction is shown by name, whereas whenever I've used cheques from my A&L account (albeit only twice!) they are just shown as 'Cheque No 25 - £10.00' for example, no reference to who has taken the money!

4 - Its a lot easier to carry a CC around than a cheque book, guarantee card and a pen!

Cheers

Steve

darbooka

Willsnarf1983 wrote:

stores are unlikely to give u cash back for a cheque untill it is cleared coz its a blatent way of fraud. i know whe i worked for Blockbusters we never paid csomeone back a cheque in cash unless we knew it had been cleared first

From my experience your info is wrong, and regarding your experience at your Blockbusters store I would say that your policy would only be reasonable if it was clearly posted in the store or stipulated to the customer upon payment of a cheque. How would the till person or even the manager know if the cheque has been cleared or when it might be? Most national store chains assumably process cheques through an accounting department, and some may even send off the cheques to a discount clearing house or offshore financial centre for various tactical accounting benefits. In any event, once you've paid you're obligated to ensure that the cheque will clear, and from an accounting perspective the store and the respective bank(s) have to wait for the funds; but from a customer purchase perspective you've paid as if you've paid cash. If something is wrong with the product or service and entitles a refund, then the store has to refund by means of payment (unless you agree to an alternative) and as they are unlikely to whip out the company chequebook and scribe an amount payable to you, it's more than likely they'll give you cash. They cannot force you to wait indefinately for your cheque to clear, when they don't even know when that will be or even where the cheque is, or in many cases where and when your cheque was deposited by their bookkeepers, accounting department or other staff. Mind you, if your cheque at any point does not clear then your in trouble and can face various penalties but if you are responsible and have set aside the funds to cover the cheque once you've issued it, and are an organised in your personal bookkeeping then there should be no problem and that should not be an issue. But clearance of the cheque is a different matter from payment by cheque.

darbooka

Str4berr3 wrote:

IWhen you use a cheque, they swipe your guarantee card to see if they is actually money in there. If not, the guarantee card will decline your transaction. Just like a debit card/Credit card.

As the thread title states, this post is intended to compare cheques to debit cards, not to credit cards. A cheque is NOT just like paying by debit card because the the amount of the cheque does not leave your account until the cheque reaches the account - even if the store swipes your card.
I think they swipe the guarantee card to help themselves ensure that the account is active and that the cheques are valid, but I don't think they actually check on a particular amount being there. If someone presents a cheque and cheque card that were stolen, and the account owners cancelled the card in time, then swiping would let the retailer know the cheque is invalid. Plus, many stores (and for example small post offices) that accept cheques do not swipe a card at all - they just look at the cheque guarantee card and write the details on the back of the cheque to help their collections department in case it turns out to be a bad cheque for insufficient funds.

darbooka

chrisxr2 wrote:

Yes the only reason cheques take longer to go through is beacause of an arcane agreement between banks, theyt can put them through as quick as card payments now, also i for one like my money to go out straight awy as i know exactly where i am with my finances (I live by mini statements so tis miles easier). Also as has already been said, if you need your cheque guarantee card as well then just use the card as it is miles quicker.

Cheques are not put through as quickly as card payments - especially when the banks print cheques with those double lines across the face and the words 'account payee only' in between. This means that the cheques have to be carried to the bank and manually deposited by a person and then make their way through the system back to your bank before the funds go out. Even e-cheques take days to clear. Use of the cheque guarantee card does not deduct funds.
As for you preferring your money to go out straight away, if you pay by cheque why not just pretend the money has gone out (ie, don't touch it, set aside the amount to be ready for the cheque to clear) and enjoy the fact that your balance is higher, the money is there, and maybe you are getting some interest on it? If you're buying by cheque, you owe that amount on the cheque and shouldn't use it anyway because you've promised it by cheque to someone else - but if you have the choice then why hand over the actual money instantly when the cheque will allow you to retain it for much longer? If you write the amount on your cheque stub in your cheque book and keep the balance up to date, then there shouldn't be a problem. Living by mini-statement is a lifestyle choice but it is living on the edge in any event, regardless of whether one uses cheques or not.

darbooka

Walletwatch wrote:

issuing cheques to take advantage of the float may actually prove counter productive if :

(a) You are not very organised with your finances, i.e. you don't keep provision in your account balance for cheques issued by you.
(b) Your account is near zero-available-balance very often.

In the above cases, you run the risk of incurring charges for running up an unauthorised overdrawn balance. Also, because you take advantage of these chqs hitting your account late, if you don't check your statements carefully, you may miss any stray debits that may occur due to fraudulent cheques for innocent looking amounts, that you may dismiss as one of those issued for shopping.

Yes you are obligated to be responsible with your money regardless of the manner in which you spend it. But the same 'dangers', for disorganized personal financiers, of using cheques are the very same dangers that exists for using debit cards. In both cases funds will go out of your account and must be available in your account. How each person does business is a matter of personal preference, and everyone may have their own habits and styles, but I am really surprised at the line of thought which seems to indicate that by conduct people prefer to tell the store: "I have to pay for this in any event, but please take my money away from me virtually instantly via debit card instead of letting it stay in my account maybe even weeks longer until the cheque clears, because if I pay you a cheque I might forget that I bought from you and/or spend all my money before you deposit my cheque. So please, save me 60 seconds of writing out a cheque and take my money from me ASAP. I don't want the money from this purchase to stay in my account any longer. Just take it off me. Let me tap in my four digits and get these wretched funds out of my account immediately."

darbooka

buses7675 wrote:

I have to agree on the side of the people using CCs, rather than chequebooks!

OK but this thread, as per the title was intended to compare cheques with debit cards, and not cheques with CC's. Besides, there are times when even CC holders face the need or alternative of paying by cheque or debit card in addition to a CC; ie, part-payment of CC and remainder with another method, when CC is maxed out, when wanting to reserve remaining CC limit for purchases benefitting from the greater consumer protection of a CC, when a company charges extra fee for payment by CC, etc. [/QUOTE]

I like to be able to see when something has been taken from an account (which you can do easily most CCs online)

You can still see it, if you take it out in your own personal accounting. Who needs automation to remind you that you've paid for something when you can just write it on your cheque stub after you've made the purchase? When using a cheque you can just consider it paid for but in actuality the amount remains in your account until they get around to taking it away. What's wrong with that?

with CCs you get between 56ish days and a minimum of about 14 days between a transaction and having to actually pay for it

And whopping interest if you're late in paying off your credit card or a hefty late payment fee if you forget entirely.[/QUOTE]

with CC online statements, the company who made any particular transaction is shown by name, whereas whenever I've used cheques from my A&L account (albeit only twice!) they are just shown as 'Cheque No 25 - £10.00' for example, no reference to who has taken the money!

Or you can just refer to your chequestub, which are all conveniently number consecutively in your chequebook and correspond respectively with the chequenumbers of the cheques you've written. You can just look up that mysterious 'Cheque No 25' by flipping to stub number 25 in your chequebook and see who it was written to. Walla! And maybe you've even undertaken to staple the till receipt to your chequestub whereas you can even then be reminded of what you've spent the money on. Even CC online statements don't give you that kind of itemization. [/QUOTE]

Its a lot easier to carry a CC around than a cheque book, guarantee card and a pen!

Put a cheque and a CC on a weighing scale and see which is heavier. Put each in your wallet and see which makes it more bulky. You needn't carry the entire chequebook around. You can put one or two cheques in your wallet and when you get back home just update the stubs as to the amount and date and payee. At the time of the purchase you can jot the cheque stub number on your till receipt for an added reminder to update your book when you get home. Why not make the effectiveness of automation rely on you instead of rendering yourself totally reliant upon automation?
As for the pen, actually every till operatoir will have a pen or know where you can get one:). Moreover, most high volume store tills will actually print out all of the details on your cheque and then you'll be handed it back to check (no pun intended) and sign. So even if you do insist on lugging your own pen, you'll be saving not only time but also ink! :T

Walletwatch

darbooka wrote:

How each person does business is a matter of personal preference, and everyone may have their own habits and styles, but I am really surprised at the line of thought which seems to indicate that by conduct people prefer to tell the store: "I have to pay for this in any event, but please take my money away from me virtually instantly via debit card instead of letting it stay in my account maybe even weeks longer until the cheque clears, because if I pay you a cheque I might forget that I bought from you and/or spend all my money before you deposit my cheque. So please, save me 60 seconds of writing out a cheque and take my money from me ASAP. I don't want the money from this purchase to stay in my account any longer. Just take it off me. Let me tap in my four digits and get these wretched funds out of my account immediately."

I'd see this dialog differently.

"Well, I could pay for this item by debit card, or by cheque. Say I were to pay by cheque. Assuming my weekly shopping is £80, the total amount I shop for in a year is £4160, and if I were to assume each cheque I draw will take an average of 15 days to hit my account, i am sitting pretty on a float of £4160 for a period of 15 days, thereby gaining a princely sum of £6.84 per annum interest at 4% net, which comes to a little more than 50p per month. Now to make this gain, I will need to keep track of every single cheque payment I make till the time it hits my account, and tick off the debit on my little note page that I have on my chq book. I also run the risk of stray debits coming to my account and me not noticing it, since I'd assume that these were actually part of my shopping chqs drawn."

As you yourself have indicated in your post, different strokes for different folks. To me, it is not worth it.

miller

MyUserNamesTaken wrote:

I paid by debit card for car tax at my local post office the other week!

I normally stuff the MOT, insurance and cheque (this is the only thing I pay for now by cheque!!) into an envelope and send it to the post office. Turnaround is fairly quick. I can understand why people don't like the risk of losing potentially valuable documents, but I really hate wasting my lunch break in the Post Office! I also got my E111 by post too.

I have heard on the grapevine that you can now pay online for your road tax.
http://www.vehiclelicence.gov.uk/EvlPortalApp/. You must have a new style MOT certificate to use this service.

buses7675

darbooka wrote:

Or you can just refer to your chequestub, which are all conveniently number consecutively in your chequebook and correspond respectively with the chequenumbers of the cheques you've written. You can just look up that mysterious 'Cheque No 25' by flipping to stub number 25 in your chequebook and see who it was written to. Walla! And maybe you've even undertaken to staple the till receipt to your chequestub whereas you can even then be reminded of what you've spent the money on. Even CC online statements don't give you that kind of itemization.



Put a cheque and a CC on a weighing scale and see which is heavier. Put each in your wallet and see which makes it more bulky. You needn't carry the entire chequebook around. You can put one or two cheques in your wallet and when you get back home just update the stubs as to the amount and date and payee. At the time of the purchase you can jot the cheque stub number on your till receipt for an added reminder to update your book when you get home. Why not make the effectiveness of automation rely on you instead of rendering yourself totally reliant upon automation?
As for the pen, actually every till operatoir will have a pen or know where you can get one:). Moreover, most high volume store tills will actually print out all of the details on your cheque and then you'll be handed it back to check (no pun intended) and sign. So even if you do insist on lugging your own pen, you'll be saving not only time but also ink! :T

Fair point! Can't really argue, but still, I'm going to carry on using my CC! Also one other point I'd not thought of, though as far as I know it does only apply to Cahoot users, you get a slightly better interest rate if you only take a debit card, rather than a debit card and cheque book!

Each to there own I suppose! Nice interesting thread this, seeing why people use different methods!

Cheers

Steve