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When Is a Paper Check a Good Form of Payment?

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If you have a checking account like most Americans, then you probably use your debit card or use your ATM card to take out cash. This is very common. In fact, most people make a little over 20 debit card purchases each and every month. However, you should also make sure that you ask your bank for a traditional checkbook. While checks are not used nearly as often as debit cards, checks can come in handy. Keep reading to learn about some situations where a paper check is a good idea.

When a Business Uses a Third-Party Processor

Some companies, including utility businesses will use third party processing companies to process credit and debit payments. This is also something that is common with government agencies. Third party processing companies use their own commercial bank accounts to process payments. In other words, they accept the credit or debit payments and then wait for them to process through the bank. The processing business then deposits the funds in the merchant, government client, or utility company's bank account.

If a third party processing company is used, then a fee is charged for each transaction. This fee is sometimes paid by the merchant, but it is often passed on to you. If you want to forego the fees, then you can write a check instead. Most merchants or businesses that ask you to pay the processing fee will typically accept paper checks as an alternative. This can save you a great deal of money if you need to pay a few extra dollars in processing fees if you need to pay your electric bill every month. 

When You Want to Trace a Payment

Certain payments that you make each month are extremely important and must be made on time. This includes  your mortgage or rent. If you mail out your payments, then you will have an easier time tracking payments in the form of copied cancelled checks. This may not be easy if you pay by cashier's check or money order. 

If you sent a cashier's check, then you can ask the drafting bank for proof that the check was cashed. You will typically need to provide your identity to the bank as well as the check number and the amount of the check. You can then ask for the copy of the check. This requires you to pay a fee. If the check was not cashed for some reason, then you can stop payment. However, it can take up to three months for you to get your money back. This is not something that will happen with a personal check.

If you paid with a money order, then you will need a money order receipt. You can then contact the money order business for proof that the money was received and cashed by the recipient. The problem with a money order is that it can be costly and time consuming to acquire proof that the money order was cashed if you no longer have your receipt.