Magazine article The Wilson Quarterly

The Right to Bear Checks. (Economics Labor & Business)

Magazine article The Wilson Quarterly

The Right to Bear Checks. (Economics Labor & Business)

Article excerpt

"Why Do We Use So Many Checks?" by Sujit Ghakravorti and Timothy Mc Hugh, in Economic Perspectives (2002: Third Qtr.), Federal Reserve Bank of Chicago, 230 S. LaSalle St. Chicago, Ill. 60604-1413.

Every month in the United States, more than 15 checks per person are written. That's more than three times the number in Canada and at least 15 times the number in Italy and several other European countries. What happened to America's commitment to the brave new checkless world?

Checks may be less efficient than electronic payments, according to Chakravorti and McHugh, a senior economist and a senior analyst, respectively, at the Federal Reserve Bank of Chicago, but American consumers don't see much individual benefit in quickly switching to the new format. While credit cards are now more popular than checks for point-of-sale transactions, total check volume went up in America during the 1990s, while it declined in most other industrialized countries. Of the nearly 50 billion checks written in the United States in 2000 (total value: $48 trillion), consumers wrote slightly more than half.

Consumers perceive each check as virtually free. Instead of per check transaction fees, most prefer bank accounts with fixed monthly fees, or minimum balance requirements and no fees. …

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