A Checklist For Checking Accounts

In the age of online banking, mobile bank transfers and credit cards, are checks still relevant?

I was walking through Greenbelt 5 one day where nothing retails at less than 500 pesos anymore, except for water at that gelato store, which is 99 pesos a pop. I imagined, if I went into one of these stores and didn’t have any cash or swipable plastics on me, would they accept my good old check?

Imagine sitting down in a restaurant. After having dinner, you ask for the bill and you issue a check, proudly signing it in front of your waiter. I wonder how the waiter will react. Would it be normal scenario for him, or weird but possible, or completely incredulous?

Paying for dinner or your purchases (groceries?!) are not any of your checkbooks strongest suits which begs the question, how relevant are checks in these modern times.

For business people, such as entrepreneurs and business managers, checks are very much a part of their financial life. But for the ordinary folk such as you and I, how can we make checks beneficial for us?

But first of all, what are checks and checking accounts anyway. A checking account is basically a deposit account that comes with a checkbook. It was invented as a “convenient” banking product that allows you to pay for purchases and expenses without going to the bank for cash. The check was the precursor of automatic teller machines and ATM cards, which give the convenience of getting cash from any machine using your card. So if you can get cash instantly nowadays, why did checks survive till this very day?

Big Sums

One of the reasons why checks are still useful is because it allows you make big purchases without the need to carry your cash around. Security is a big concern nowadays and you don’t want to be carrying around hundreds of thousands of pesos with you while walking on the street. ATM cards only allow you a certain amount of cash available for withdrawal daily and credit cards have a credit limit. Since checks are like “templates”, you can put any amount on the check, whether it be 500 pesos or 500,000 pesos. In the same way, it lets you pay for the exact amount without asking for a change. In that way, it’s convenient.

Planning Your Expenses

Paying for your bills using checks allow you to plan your finances ahead. You can post-date your checks to the bill due date and attach these to your bills. Come payment time, you no longer need to withdraw cash for the payment. Also, since check take 2-3 days to clear, your cash gets to stay in your account for an extra couple of days beyond due date, giving you a higher average daily balance and earning you more interest. Nowadays, bills are paid using online and mobile facilities but for some people, nothing beats the certainty of having something on paper to remind you that the payment will be made.

A Necessity in Some Transactions

At one point in your life, you would be required to have a checking account, especially if it concerns large transactions or purchases. One of the times when I was relieved to know that I have a checking is when I signed up for a lease in a condominium unit in Ortigas. The owners required me to submit 11 post-dated checks for each month of rent for the rest of the year. Checks basically are a financial security – a proof of a financial transaction – and this entitles the holder of the check to a claim on your money.  Some institutions or parties to a financial transaction would require to secure your payment through the issuance of post-dated checks. Cars, insurance, home mortgages and leases are just some examples. At one point in your life, as your financial situation improves and you deal with larger financial transactions, checks will become increasingly relevant.

So are checking accounts for you? Maybe not now, but surely in the future you would need it. So why not start one now. We’ll take a look at a checking account product after this article.


About Benedict Bernabe

Benedict Bernabe, 27. Benedict has a Master's degree in Development Studies from the University of Melbourne, Australia and a Bachelor of Arts degree in European Languages, cum laude, from the University of the Philippines Diliman. He has worked with the United Nations in the Philippines as the Community Facilitator of the Community of Practice on HIV&AIDS. He worked with Standard & Poor's Capital IQ, a financial information company, as researcher, translator and quality analyst in the investment research team. Prior to this, we worked at IBM Business Services. Benedict is a certified yoga teacher.

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