WaPo data columnist Andrew Van Dam: “Paper checks are dead. Cash is dying. Who still uses them?“
Oddly, the other is true for me: I use checks regularly but specifically, whereas I essentially never use cash.
In a few years, comically oversized foam-board novelty checks will be the last remaining evidence of a 20th-century icon, as the paper check goes the way of the landline phone and the floppy disk. Even the most dubious cliché of the past century — the promise that the check’s in the mail — has fallen from common usage.
So where — if anywhere — are paper checks making their last stand? That’s what astute reader Bill O’Donnell from Chicago wants to know. “How many Americans still use paper checks?” he asks. “Who are they and where do they live? What are the trend lines?”
Let’s start with the trend lines, Bill! They, uh, point down. At the turn of the millennium, back when recording each transaction on paper might still have seemed like a good way to outfox the Y2K bug, they were the default for anyone not handing over cash.
Back then, 6 out of every 10 noncash purchases, gifts and paid bills were handled with checks. A mere two decades later, just 1 in 20 are. The paper check’s fall from grace has been meteoric, in the plummeting-so-fast-it-immolates-in-the-mesosphere sense.
Here’s the requisite graphic:
Again, I’m an outlier. The only times I use my debit card are at a particular gas station that gives me a substantial discount for using it rather than a traditional credit card and—exceedingly rarely—to withdraw cash from an ATM. I use credit cards, both physically and virtually (either for online payment or via ApplePay) almost exclusively otherwise unless there’s a fee, in which case I use a virtual check.
As recently as 2003, the Federal Reserve ran 45 check-processing locations in whichbrigades of workers routed each check. A decade later, it was operating just one, in Atlanta, as check usage fell and the Fed executed a long-planned transition to a largely electronic system. The checks were also processed faster, meaning even fewer of them were, as the cliché went, in the mail.
I can’t honestly remember the last time I sent a real check via mail.
There are a handful of times, usually dealing with government agencies, where I need to pay via virtual check (i.e., by putting in my routing and account numbers to initiate an electronic transfer). Otherwise, I write checks for dealing with personal services (our cleaning lady and lawn service) who seem only to take payments that way. (I suppose I should try to convert them to Venmo or Zelle.)
After a few paragraphs of history, Van Dam continues,
As recently as 2017, cash was still king. The following year, it was usurped by the debit card. And then covid-19 hit and made us all a little more reluctant to meet in person and pass objects back and forth. Now cash is used far less frequently than it was just five years ago.
The rise of the credit card, which is used in almost a third of all U.S. transactions and took over the top spot from debit cards in 2022, has further sidelined paper bills. And payment apps such as Venmo and Zelle, while still a minor part of our financial lives, expanded rapidly during the pandemic and remain elevated.
Again, the requisite graphic:
That is stunning, indeed. Aside from the exceptions already noted, I haven’t used a debit card on a regular basis in at least 30 years. The same is true of cash, as well. There used to be a time when I was sheepish about making very small transactions via credit card—but that was decades ago. Now, it’s my default unless I’m charged a fee for the privilege.
As for the debit card’s analog cousin, the paper check? It starred in just 4 percent of our transactions. These days, most Americans (57 percent in 2020 and 2021) have not written a check in the past month, and even those who write them do so rarely. They’re most common in high-dollar transactions of $500 or more, but even then we write checks only 14 percent of the time.
Again, unless the merchant discourages my writing a check, I much prefer to use a credit card for transactions large and small. Indeed, especially large ones, since I get a modest amount of “cash back” for doing so.
As a rule, age predicts check usage: Three-quarters of retirement-age Americans still use checks, compared with fewer than a tenth of their college-age comrades. It’s also higher among those with more education and higher earnings, regardless of age.
I’ve got two in college and one who’s graduated and doubt they even have checking accounts. But, while I’m in my mid-50s, I’m pretty current in adoption of modern financial tech. My use of checks and even cash is pretty esoteric. Indeed, the only time I can think of that I still use cash is for tipping valets, bellmen, and the like. (This is actually awkward, in that I have to remember to have small bills available for those encounters, which are relatively rare.)
Bill also asked about geography. We don’t have great data on that, but it looks as though check usage is most common in the great Pacific coast and the Midwest, and lowest in the East and the South.
I won’t reproduce the graphic, but must say I’m surprised. I’d have bet good money that the South was a laggard here.
There’s another way to look at where people still use checks: by merchant type. Even in 2022, there are still a handful of businesses where checks are the most common form of payment. In particular, we still reach for the old checkbook when dealing with contractors, charities, taxes and landlords. But you may encounter some furrowed brows if you hold up the line in Safeway or Taco Bell to painstakingly spell out “sixteen dollars and forty-four cents” — data shows that almost nobody uses checks for groceries, fast food or transportation anymore.
Because I tend to do grocery shopping in late afternoons, I still encounter elderly customers in front of me writing checks. I can’t remember the last time I wrote a check in a grocery store but it has to be at least three decades ago. But otherwise, yes, we tend to pay folks in the way they make it easiest to pay.
One factor transcends age, income, education and geography in terms of check usage: race. White people still love writing checks. Most White people (51 percent) have written a check in the past month, while fewer than a quarter of their Black friends have done the same. Hispanic (31 percent) and Asian (37 percent) Americans are in the middle, though further analysis hints that their numbers tend to be closer to Black people than to White ones.
I guessed race is serving as a proxy for socioeconomic status here. The non-government entities to whom I’ve written paper checks in the past year have been exclusively Hispanic. I was right, but not for quite the right reasons.
White America’s preference for paper checks can’t be explained by any demographic characteristic we considered. At every age, income tier and education level, a White person is much more likely to write checks than friends of other races, with Black Americans standing out almost as much on the other end. It seems likely the real rift lies not in demography, then, but in history.
Black Americans, once marginalized by the formal banking system, were five times less likely to have a bank account than their White peers in 2021, according to the Federal Deposit Insurance Corporation. With more than 1 in 10 Black households remaining unbanked, it’s no surprise that Black Americans are consistently the biggest cash users.
Black Americans may also turn to cash because they’re much more likely to be denied credit. Almost half (46 percent) of Black people who applied for credit in 2021 were either denied or approved for less than they requested, dwarfing the 22 percent of White people who met the same fate, according to a Federal Reserve survey.
Hispanic Americans also tilt toward debit cards and cash, while Whites match the overall trend in which debit cards replaced cash, only to be overtaken by credit cards. Asian Americans have the most lopsided financial group of any we looked at. On average, they use credit cards in about 60 percent of their transactions, up from a bit over 40 percenta few years earlier.
I’m not sure I can explain this but it’s interesting.
