STILL WRITING CHECKS?

Remember when music went digital? No more massive stacks of CDs or worries over scratched discs. You could exchange all of that for your first-generation iPod that fit in your pocket.

But if you’re old enough to remember that, you also remember a less-than-legal shared music platform called Napster. With this new tech, you could listen to “free” music and burn your own CDs without paying the artists a dime (ever make a mixed CD for someone you liked?).

So, the theft could keep going. Not ideal for music artists with copyright on those songs waiting to get paid for access to them. It eventually got shut down (though it actually still exists today in a re-branded form).

There’s often a fallout somewhere when advancing technology sweeps in.

That goes for digital payment options, too. As you know, there are a rising number of ways to make payments electronically, but there are actually a lot of people and businesses who still put checks in the mail to pay their bills.

Unfortunately, that can be a problem (not only because it takes longer), but also because it makes you vulnerable to check fishing, which I want to talk about today.

Janet Behm's
"Real World" Personal Strategy Note
A Great Reason to Ditch Mail-In Checks
“Neither snow, nor rain, nor heat, nor gloom of night stays these couriers from the swift completion of their appointed rounds.” - Herodotus, Greek historian

Hard to depend on anything anymore: The U.S. Postal Service is warning folks that thieves are now stealing checks right out of mailboxes.

If you needed a straw-breaking-the-camel’s back reason to start doing more money transactions electronically, there it is. What are your options?

Please Mr. Postman

This check-fishing is no crime of opportunity by loners, but a growing wave. Banks issued some 680,000 reports of check fraud last year, almost double the number from 2021. The USPS reported about 300,000 complaints of mail theft in 2021, more than double that of 2020.

There’s no reason to think this is going away soon. Authorities say that the crooks have sophisticated operations that train thieves to snatch envelopes that look like they might contain checks, with others worming their way into actual USPS centers.

The most common type of check crime is “washing,” where a criminal changes the payee’s name on the check and the amount of money. Still other crooks create fake IDs and even companies with the information on the checks. The potential damage to your finances is limitless.

But your bills won’t wait. What do you do?

ACH

You may already know one answer.

If you have autopay on your bank account for any regular bills, it probably shows up on your bank statement as an “ACH debit.” ACH stands for electronic, bank-to-bank money transfers processed through the Automated Clearing House Network.

ACH transfers are quick and usually free. The network processes payments almost continuously and settles payments four times a day. Your bills generally get paid on the next business day after you make the transaction. These are on the rise, too – indicating that they’re secure ways to send money. Nacha, a non-profit association funded by the financial institutions that use its ACH network, says 30 billion ACH payments were made in 2022 – a pretty good track record for security, unlike your corner mailbox lately.

There can be a few drawbacks. Banks sometimes limit how much money you can send via ACH, by transaction or over a set time like a day or a week. Also, not every bank sends ACH transfers at the same time – which you need to watch if you’re cutting it close to pay a bill. (The system overall is improving its same-day processing.)

You can usually sign up to make ACH payments either through the vendor like your cable company, insurer or mortgage company or through your bank. You’ll need to know your bank account number and routing number, which is on the lower left of your checks.

Third parties

You know about these, too, we bet: the likes of Venmo, PayPal, Zelle, Plaid and others that let you send money to others who either also use the vendor or will send it to others’ bank accounts.

Accounts and transactions on these vendors may be backed by your bank account or credit card or, in some cases, an account with a third-party platform.

There can be a few more hiccups than with ACH, so read the fine print. Most platforms charge fees for at least some types of transactions, and some won’t deal with international transfers of money.

You’ve probably also heard a lot about how Uncle Sam is going to start tracking your payments through these platforms and that early next year the IRS will expect information to issue a Form 1099-K to everyone you paid.

That – in theory now, anyway – will apply only to professional payments, not to loans to friends or to fronting Uncle Leo his share of the dinner tab the other night. For now, though, if you use one of these platforms, keep good records. It never hurts to be able to prove it was a personal payment … You might have to check back with this blog in a few months from now.

Wire transfers

This is the legendary (and perhaps among the first) non-mail way to send money, an electronic transfer of funds domestically and worldwide. They can involve amounts from accounts between banks or via a service such as the famous Western Union.

To send one, you need the recipient’s name, address, and contact number as well as their banking information if you’re making a bank-to-bank transaction. International wire transfers can take two business days to process; domestic usually take less.

These transfers can be pricey compared with ACH; Western Union might cost around 10% of the transmitted amount. Banks might take as much as 50 bucks.

A rip-off? Maybe. Postage stamps weren’t free, either.

If there’s a way to pivot away from writing checks, it’s time to consider it. While there are different implications with e-payments, the world is becoming increasingly “paperless” so staying with that momentum will make your life easier (plus you’ll always have a “paper” trail — ironic terminology here).

Whatever you decide, this blog is here every week to keep you up to date on everything affecting you and your money:

BE THE ROAR not the echo®

Janet Behm