Frugal husband and I recently opened our first current/checking account. FH and I have never used checks before but we had to adapt to the times as our usual service provider recently changed policy and now exclusively requires payments to be done by check. We suspect this was due to staff being sticky with the cash.
We used our usual bank to open an account and rightly so–as banks now require some form of deposit history on the client’s part before allowing you to open a current account. My bank, in particular, requires an existing bank account with an age of at least six months.
Also noticed the quite detailed questions regarding my purpose i.e. if there is a particular payee that I will be regularly paying issuing checks to. Once I named my regular payee, my bank asked for the endorsement of such payee. I was also asked to submit a copy of my tax return. I understand that the bank is probably just complying with anti-money laundering rules requiring it to know its customers.
Does not earn interest
My current account, unfortunately, does not earn interest.* In return, it requires a low maintaining balance of only PhP5,000.00 / USD 96.15 and a checkbook of 100 checks costs only about PhP 550.00/ USD 10.58.
Certain minor offline inconveniences
Other than the minor thing that your money won’t earn interest, a checking account carries with it certain other offline inconveniences.
I must preface though that I love the offline aspect of using checks. It certainly feels safer and more secure than paying by debit card or a huge chunk of cash. Also, it is always nice that I won’t have online access to my current account as hacking is so ubiquitous and scary nowadays. It is also cheaper than periodically getting a manager’s check which costs about PhP100.00 per check.
First, there is no passbook or online access to our current account so we have to exclusively monitor it to ensure that deposits and withdrawals are balanced, i.e. that we do not overdraft checks. Checking account statements are only mailed on a monthly basis.
Luckily, detailed monitoring of my current balance isn’t much of a problem as I already monitor all my bank balances via an app and tediously input all comings and goings of money. This allows us to ensure that we are not going into overdraft and avoid the overdraft fee of about PhP2,250.00/USD 43.00.
Second, one has to be super careful with the physical act of writing the checks. If the check isn’t accepted by the bank for any reason such as, insufficient balance, clerical errors, misspellings, discrepancy in the name, divergence between the amount in figures vs. the amount in words, the bank will slap you that PhP2,250.00 bank charge. That bank charge becomes truly annoying when in done conjunction with the lack of interest income on your checking account!
Third, you will have to learn how to manually balance your checking account in case the money managing apps fail. My check fortunately comes with a monitoring page where I can write down the date, check number, deposit / withdrawal amounts, and the current balance.
Fourth, as a check issuer and user, you are now subject to complying with Batas Pambansa Blg. 22. It is generally ideal that you only issue checks with amounts that are fully funded in your account as BP Blg. 22 penalizes the mere issuance of a check with the full knowledge that one does not have sufficient funds in one’s account and the check is later dishonored by the bank.
Granted, the current Supreme Court policy is to impose the payment of a fine on violators and reserve imprisonment only for the most serious cases. Nevertheless, BP Blg. 22 remains good law so the issuance of a bouncing check is still a criminal offense.
Fifth, just because it’s offline does not mean it is fully secure. Place your checkbook in a secure place in your home away from the access of unauthorized persons. I understand that it would be so easy for others to issue checks from your checkbook, simulate your signature, and then take your money.
If you’re like us and thinking of opening a current/checking account for the first time, remember to keep these things in mind.
Have you ever used a checking account?
*BDO, however, seems to have a type of checking account that earns interest.