Balancing my check account [LWN.net]

Balancing my check account

Posted Sep 14, 2005 7:26 UTC (Wed) by hingo (subscriber, #14792)
Parent article: The Grumpy Editor's guide to personal finance managers (Part I)

Since we are an international community, I hope you'll forgive my (only slightly) off topic rant here...

I personally couldn't help but smiling, when reading that the grumpy editor needs a computer program to balance his checking account. I remember seeing a check (yes, I've seen one person once using a check) in Finland when I was a really small boy. After that we have been using credit cards or equivalent non-credit bank cards. And cash of course. If you want to know your account balance, just log in to your banks website and check it out :-)

True story happened to someone:

Finnish guy goes to US and US guys are amazed at his mobile phone. So he starts talking about it's features.

- And it can browse the web too.

- It can? US guy looks at him in disbelief.

- Sure, Finnish guy says. I can even log into my bank and pay my bills if I want to.

- Ahh, for a moment there I almost believed you, but now I know you're kidding me... US guy has a good laugh.

(Log in to post comments)

Balancing my check account

Posted Sep 14, 2005 9:00 UTC (Wed) by chrispe (subscriber, #4442) [Link]

Yes, I've not been paid in paper all my working life (and I'm 34). Finland is one thing, but we're not exactly known for rapid technology uptake here in the UK.

I once used Quicken for about two days before saying "what's the point?"

Why do the Americans still use cheques for salaries? Maybe it's a cultural thing; Perhaps they feel cheated unless the numbers pass through their fingers on the way to their bank accounts?

Balancing my check account

Posted Sep 14, 2005 12:35 UTC (Wed) by lwn163 (subscriber, #11797) [Link]

I'm not married to the idea of checks, but I do want a paper trail for most
transactions, for reasons similar to why I want a paper trail for electronic
election machines (as an aside, I don't want a receipt for my vote in an
election, I just want my vote recorded on paper somewhere)

For the things that I do keep track of electronically, I've been using an
ancient (pre 1990) version of quicken on an old 286, and it is a fantastic
program. I do have uneasy feelings about its non-freeness. I think gnucash
et. al. could learn an awful lot from it. Its interface is an 80x24 text
window, everything (including menus) is keyboard driven (and most of the
features mentioned in the article are supported sanely), it is very fast
(this is on a 286 mind you), and I found it quite easy to learn.

About cheques...

Posted Sep 14, 2005 13:19 UTC (Wed) by kleptog (subscriber, #1183) [Link]

Cheques are one of those things that varies a lot between countries. Australia has cheques but they're becoming rarer. The fees are crazy and they takes three days to clear. You want to wait three working days for your salary to be available? Most people choose for direct deposit, then it's available the next day. You're supposed to get a slip from your employer when you're paid though.

Here in the Netherlands they experimented with cheques but the fraud was so bad that they killed it fairly quickly. Here it works in reverse, the bill has a tear off section with the account number of the account to be paid to. You fill your account number and sign it and send it to *your* bank, no third party involvement. So it's more like payment authorisation.

I worked in a company in Australia that accepted cheques and they were the single most annoying method of payment. First the customer sends it to you. You have to copy by hand the details into the system to record the payment. Then you take all the cheques to the bank. Three days later you find out which cheques bounced due to insufficient funds. You then have to undo the payment in the system, add the bank fee to the account, contact the customer who then hopefully pays some other way. Ugh! Gimme electronic payment anyday.

If the customer doesn't have the money, why should I care? Why am I even involved in the process?

I wouldn't mind if cheques disappeared from the face of the earth.

Balancing my check account

Posted Sep 14, 2005 15:08 UTC (Wed) by NAR (subscriber, #1313) [Link]

I do want a paper trail for most transactions, for reasons similar to why I want a paper trail for electronic election machines

I think you don't need checks for this. Even though my salary goes directly to my bank account, I get a quite detailed paper about this (which also includes the money that didn't get to my account, e.g. taxes). My bills are atomatically payed from my account and I get a paper from the electricity company, from the gas company, etc. When I pay with the debit card, I get receipts, just like when I get cash from the ATM. And I also get a monthly summary from the bank about my accounts on paper.

Bye,NAR

Balancing my check account

Posted Sep 14, 2005 19:02 UTC (Wed) by smoogen (subscriber, #97) [Link]

The real idea about balancing a check account is really to keep a budget. This is something that doesnt seem to be taught or 'learned' by people these days as can be seen by the fact that people seem to just keep using the ATM card until it says 'no more money'.

Balancing my check account

Posted Sep 15, 2005 7:19 UTC (Thu) by ekj (subscriber, #1524) [Link]

Sure. But thats not the entire (or even the main) point of using an application like Gnucash.

The point is, to be able to make wise decisions about your finances, the first needed step is to *know* what your finances actually are. This doesn't mean only how much money you have, and how much you spent, but also what you spent it on.

Using Gnucash I can easily and quickly answer questions like:

How much did I spend in total for having a car this year, included deprecation, insurance, repairs, petrol etc ?
How much did that vacation in Cypern back 2 years ago actually cost ?
How have my stock, on average developed this year ?
Where did all the money actually go ?
Do we tend to have higher expenses in certain months ? If so, how much higher ?

Sure, you can answer all of those without a personal finance program, but it gets complicated and tedious. Especially when you, for example, own stock on an exchange where courses are given in norwegian-krone, pay fees associated with that to a brokerage wanting british-pound, live in and have most of your transactions in Euros.

Balancing my check account

Posted Sep 22, 2005 13:50 UTC (Thu) by sphealey (guest, #1028) [Link]

>> I do want a paper trail for most transactions, for
>> reasons similar to why I want a paper trail for electronic
>> election machines

> I think you don't need checks for this. Even though my
> salary goes directly to my bank account, I get a quite
> detailed paper about this (which also includes the money
> that didn't get to my account, e.g. taxes).

Consumer fraud / consumer protection laws are extremely weak in the United States, and in any dispute those laws greatly favor the entity with the most money and most political power. Which 99.99999% of the time is not the consumer.

Should you as a consumer end up in a dispute with a creditor or vendor of any type (particularly a financial institution), your _only_ hope is to have actual paper records of everything and to have sent every transaction via US Mail. As soon as you start bringing forth phone calls, e-mails, and electronic transactions as evidence the presumption of liability shifts to you and you lose. Guaranteed.

So while their is an element of conservatism in the continued use of checks/cheques, for those who are concerned about such things there is an element of self-preservation as well.

sPh

Balancing my check account

Posted Sep 24, 2005 6:21 UTC (Sat) by zblaxell (subscriber, #26385) [Link]

I've had about a 5% failure rate cashing pay checks. My bank is always ready to interpret "09/24/05" as "May 9, 1924" (despite the fact that the cheque has clearly labelled year, month, and day fields under the date area), resulting in the bank's refusal to honor the check. Handwritten checks have an even higher failure rate. In one case my check was stolen from the armored car servicing the ATM.

To date I have received every electronic payment on time, even in cases were major technical problems with the payment systems (either on my employer's end or at the bank) would seem likely to interfere. Hundreds of payments with no errors...just what I'd expect from properly maintained and supervised information systems.

These days I can barely avoid chuckling when I hand over an arbitrary piece of paper with no authentication beyond a signature to a bank teller...how could such a lame protocol actually work? Well, with a failure rate in the low double digits and an ongoing fraud/anti-fraud arms race, clearly, it *doesn't* work.

In the worst case, all one has to do is get the bank and the creditor/vendor on a conference call, read out the transaction confirmation number from your statement or electronic payment, then sit back and listen while they argue about where the money went.

So far it works every time. Usually what happens is that the creditor/vendor finally admits that their payment data is imported through a human data entry clerk, a fax machine, highly buggy third-party software, or by reading transaction details over the phone...or some combination of these. Maybe someone has typed in the wrong account numbers or the wrong amounts. Some companies have a 3-6 month (!) lag between accounts receivable and accounts billable. Sometimes, when the creditor/vendor finally figures out where your money went, you get to hear a meaty slapping, tearing, or rustling sound over the phone, as if someone is slapping their forehead or pulling out their hair.

Balancing my check account

Posted Sep 14, 2005 12:47 UTC (Wed) by MortFurd (guest, #9389) [Link]

Businesses still pay with checks because there are still people who don't have bank accounts.

Also, the phrase "balancing my checkbook" has sort of gotten stuck in the American english language. It means balancing your bank account.

Many people do use credit cards and debit cards to pay their bills and purchase things at the store and don't use checks much at all.

Also, using a check gives me immediate control of what is going on with my account without depending on the bank. Balancing a checkbook is a check to see that I've managed my money properly, but it is also a check to see if the bank is doing its job properly. If you blindly trust your bank to handle your funds, and an online check of your balance make you happy then fine. Some people would, however, like to do the arithmetic themselves and be certain.

Considering how online banking runs (think of all the phishing going on,) I would not want to do online banking in most countries. In Germany, I feel pretty secure about it. I use HBCI (with GNUCash) to pay my bills and check my balance.

HBCI uses a smart card to encrypt and decrypt communications with the bank. Only the bank's server and my card have the correct keys. GNUCash sends an encrypted packet that claims to be from me to my bank. The bank server pulls up my key and tries to decode the packet if it succeeds, then I am me and the bank does what ever the packet says (bank transfer, balance request, etc.) There could potentially be a weak spot in the encryption (or someone could steal a truck load of backup tapes with the keys,) but all in all much more trust worthy than https and a PIN. The bank is sure who I am, and I can be pretty damn sure that I'm talking to the bank since they encrypt their responses as well.

Lacking a truly secure way to do bank tranfers from home or from the office, I can well understand why businesses would stick with checks.

Also, I've never understood the advantage of the paper bank transfer forms. To use one, I must go to the bank to pay my bills. In earlier days, this was free. These days, most banks charge for handling the paper form. As an alternative, they let you use a terminal in the lobby for free to pay your bills electronically - but you still have to go to the bank to do it.

With checks you can hand them to the employee, or you can mail a payment to whoever. Bank transfers (if you don't have trustworthy home banking) requires a trip to the bank.

Balancing my check account

Posted Sep 14, 2005 18:47 UTC (Wed) by oak (subscriber, #2786) [Link]

> using a check gives me immediate control of what is going on with my
> account without depending on the bank. Balancing a checkbook is a check
> to see that I've managed my money properly, but it is also a check to
> see if the bank is doing its job properly.

At least here in Finland you get receipt whenever you pay something (food,
gas whatever) with your bank card, or when you withdraw cash with it from
the ATM.

A couple of times a month, I'll enter the receipts from my wallet to
GnuCash. Next month when the bank sends the monthly summary of all
withdraws and deposits, I'll just check whether the balance matches what I
got in GnuCash at same date. If it doesn't, I'll just check whether each
entry I'd entered to GnuCash matches what's in the bank summary. So far,
it's always been an error I've made in entering the recipe to GnuCash
(knock wood ;-)).

Balancing my check account

Posted Sep 15, 2005 12:56 UTC (Thu) by fjf33 (subscriber, #5768) [Link]

That is what I do too, but here in the US we would call that balancing the checkbook. I think is more differences in language than anything else. However, I still do have a checkbook which I hardly use. There are a couple of die hards that cannot handle an electronic payment. For example I had to start paying the building maintenance with a paper check because the management company was sending me notices for non-payment, and it was a pain to make them understand what was going on. The reason is that they are a small office that hardly has a computer so they are WAYYYY behind the times. Another one is my mortgage. If I want to pay extra principal I have to do it with a check so that I can send the for and let them know exactly how to break up the extra money. If not, they will apply it to where it is better for them (to the next payment probably). Everything else is electronic.

Balancing my check account

Posted Sep 14, 2005 17:25 UTC (Wed) by jwb (subscriber, #15467) [Link]

The term "paycheck" is lodged deeply in the American English dialect, but it does no necessarily imply the use of paper. In fact every person in my firm, and most people I know, are paid using electronic transfer. I prefer check, because there are many terms in the direct deposit agreement that I cannot accept. For example, my company's direct deposit agreement allows them to take money from my account to cover various damages and expenses. I'm not willing to give anyone carte blanche to fool with my bank balance.

Of course I still use cash for most thing. Perhaps I'm terribly backwards.

Checks (paper form)

Posted Sep 15, 2005 22:03 UTC (Thu) by goeran (subscriber, #151) [Link]

> Why do the Americans still use cheques for salaries?

Why do they use inches and feet? Farenheit temperatures? Paper format called "letter" rather than A4?

:-)

Balancing my check account

Posted Sep 14, 2005 10:31 UTC (Wed) by eru (subscriber, #2753) [Link]

If you want to know your account balance, just log in to your banks website and check it out :-)

In fact that was done in Finland even before there were such things as web sites. I started using my banks electronic banking service around 1986. The menu-based interface was written so that it could be used with any text terminal (no cursor control needed). A bit kludgy but worked. Customers who signed in for the service got a little instruction booklet together with a floppy containing Kermit for MS-DOS...

Balancing my check account

Posted Sep 14, 2005 11:59 UTC (Wed) by neiljerram (subscriber, #12005) [Link]

Your rant :-) is well made, but I hope you're not suggesting that these programs (GnuCash especially) are therefore no use at all outside the US.

(Just in case you were, try using your bank's website to produce a chart of how your balance has varied over the year, or how much you spend on food vs. travel vs. telephone bills, or a summary of your assets from multiple bank accounts, etc. etc.)

Neil

Balancing my check account

Posted Sep 14, 2005 16:41 UTC (Wed) by carcassonne (guest, #31569) [Link]

"I remember seeing a check (yes, I've seen one person once using a check) in Finland when I was a really small boy."

In Germany many transactions are done using popular Ueberweisungen, either on paper or virtually at your bank's web site. They are simply bank transfers. They are free and you can transfer money to anyone having an account at AnyBank. Utilities sending bills also send a Ueberweisung, which is a bank transfer formular already filled with their information.

You buy something off e-bay ? You get the seller's name, account number and bank name and there you go. You log in at your bank's web site and fill out a virtual bank transfer formular. Direct from your bank to his/her bank, no middleman service like Paypal or whatever. And it's free.

And no giving out your credit card information.

Of interest (still no pun), the security aspect of using such virtual bank transfer. Here's how it works:

1) You go to your bank and you ask for a series of TAN (transaction) numbers.

2) You receive then personally a list, on paper, of 50 such numbers.

3) You access your account on the internet using your password.

4) When you make a bank transfer you use one of the numbers on your list. You scratch that number and use another one for the next transaction.

5) When you're about to run out of TAN numbers, you go back to the bank to get a new list.

6) If you loose your printed list (it happened to me once) then you have to tell a good story to the bank clerk. I'd say that if you loose it twice in a row it could be difficult to get a new one.

You cannot make a bank transfer from your account if you don't have a valid list of TAN numbers that were issued to you.

You can also give out your bank account number for companies to take money. Like when buying from Amazon.de for instance. Again, no credit card info needed, no interest fee (even small) to pay, no middleman service to pay.

So everything is paid by using these bank transfers in Germany. Rent, doctors, insurance, e-bay buyings, everything. Rest is by cash and ATM card.

Now, how come there's still no teletext feature on TVs in North America ? ;-))

Balancing my check account

Posted Sep 15, 2005 17:18 UTC (Thu) by NAR (subscriber, #1313) [Link]

3) You access your account on the internet using your password.

4) When you make a bank transfer you use one of the numbers on your list. You scratch that number and use another one for the next transaction.

My bank simply sends a text message to my mobile phone after the username/password login with a secondary one-time password. This is needed not only to finish the login, but for starting transactions, modifying card limits, etc.

Bye,NAR

Balancing my check account

Posted Sep 15, 2005 19:03 UTC (Thu) by mightyduck (subscriber, #23760) [Link]

What do you do if you don't have coverage? (Yes, areas like that exist,
for instance here on Long Island) You can't do online banking then?

I definitely prefer the German PIN/TAN method.

Balancing my check account

Posted Sep 16, 2005 6:29 UTC (Fri) by man_ls (subscriber, #15091) [Link]

The Netherlands is flat as a pancake, I find it difficult to believe there are areas there without coverage apart from lifts and the Tube. Here in Spain you can maybe climb a high mountain and get lost, but most cities and villages are covered.

Balancing my check account

Posted Sep 16, 2005 14:55 UTC (Fri) by mightyduck (subscriber, #23760) [Link]

Well, compared to Europe the US is still a third world country in terms
of cell phone usage and coverage ;-). But it's catching up.

Strange 19th century banking

Posted Sep 14, 2005 22:20 UTC (Wed) by shane (subscriber, #3335) [Link]

I moved to the Netherlands from the US a few years ago, and from my lazy, computer-oriented view the banking system here is so much better than in the US it almost makes me weap.

The idea of handing someone a piece of paper, which they then hand to their bank, and their bank sends to my bank, seems extremely quaint.

Just another example of an extremely poor quality business that people accept because it never occurred to them that they should not have to accept it. :(

Strange 19th century banking

Posted Sep 15, 2005 17:38 UTC (Thu) by macc (subscriber, #510) [Link]

In Germany you pay by check if you are short on money.

i.e. when a bill is due you send the check on the day its due.
This is usually deemed sufficient for meeting the due-date.

But snailmail takes 2 Days and the recipient has to carry it
to his bank and get it booked(1-2Days). After another 2-4 Days
the amount is debited to your bank account.

This gives you about a week of credit
which some businesses and private persons
desperately need.

Strange 19th century banking

Posted Sep 15, 2005 17:50 UTC (Thu) by rogerd (guest, #4170) [Link]

Check Kiting, yeah, that is what it's called.

Even our US system calls that fraud, and will prosecute people for it.

I think the last Banking bill here made it allowable to post an electronic copy of a check as if it were physically received, thereby reducing the "check's in the mail" timeframe down to the speed of light transit.

Strange 19th century banking

Posted Sep 15, 2005 19:09 UTC (Thu) by mightyduck (subscriber, #23760) [Link]

I moved from Germany to the US and the banking system was a big
(negative) surprise to me. It's sooo 19th century. But it's not the only
outdated and poor thing Americans put up with. Another one are appliances
(from washing machines to microwave ovens...). Don't get me started on
that one.

Strange 19th century banking

Posted Sep 15, 2005 23:26 UTC (Thu) by lothar (subscriber, #14052) [Link]

You'r talking to my heart ;-) I moved to the US about two years ago (from
Germany) and it was hard to believe what I saw. Sadly it's rality. :-)

Strange 19th century banking

Posted Sep 16, 2005 23:48 UTC (Fri) by giraffedata (subscriber, #1954) [Link]

The idea of handing someone a piece of paper, which they then hand to their bank, and their bank sends to my bank, seems extremely quaint.

Actually, there is normally at least one other stop between the banks, and often several.

But starting one year ago, the transfer is hardly ever paper. The paper check gets put into a computer and shredded as it enters the system, and makes the rest of the journey as an electronic record. But in some cases, it actually gets printed out and becomes paper again, because some smaller banks don't have the electronic check technology. The complexity of such a system (think about all the safeguards necessary to make sure a check doesn't accidentally become two checks as it changes form) made it take years for the US banking system to take even this step.

Just another example of an extremely poor quality business that people accept because it never occurred to them that they should not have to accept it. :(

I'm not sure who you think is accepting what poor quality. There are people who demand to be paid with a physical instrument and others who demand to pay with a physical instrument. Banks aren't forcing anyone to accept anything -- they all handle checkless transactions for people who want them. Virtually no businesses force customers to pay by check, because there are banking services that will convert a customer's electronic payment into a paper check where the business does demand one, and businesses that take a check but not plastic at point of sale are extremely rare.

I suspect countries which have managed to eliminate checks already have done it through the use of central management of the banking system, which is lacking in the US. And it's lacking not because the folks in charge of it are too stupid to see its advantages, but because deep cultural values in the US say government should be local -- the banking rules are made primarily by individual state governments, private banking associations, and invidivual banks.

Balancing my check account

Posted Sep 24, 2005 5:51 UTC (Sat) by zblaxell (subscriber, #26385) [Link]

That could never happen to me, because no production cell phone on the market anywhere on the planet has 153 megabytes of free RAM to blow on my bank's Javascript login page, or the precise set of CSS and DOM bugs that Netscape 4.74 has.

(OK, the offending bank did actually fix their web site a year or two ago. But at the time the customer support people were quite belligerent about any failure of their site to work with any particular browser being my problem.)

This is one thing I haven't been able to figure out. I've used no less than five financial institutions over the years, and only one of them was accessible with w3m...until they "upgraded" their web site a year or two ago. There is no reason to use Javascript on a bank web page--the transactions and dialogs are more or less exactly what HTML forms were designed to do. I've seen bank sites that theoretically would work properly without Javascript and use no features not present in HTML forms from the RFC1860's, *except* that there is an explicit Javascript check on the back end.

Banking with w3m, while it lasted, was nice: I'm logged in and out and finished a bill payment in under 30 seconds, which is about the login page loading time of the Javascript banks...