Everything About Checkbooks: Definition, Function, and Modern Use

What Is a Checkbook?

A checkbook is a booklet of sequentially numbered paper checks connected to a checking account, used to pay for goods or services. The checks are usually preprinted with the account holder's name, address, and other identifying information. Each check will also include the bank's routing number, the account number, and the check number.

Checkbooks have become nearly obsolete due to ease of modern-day digital payment methods. But they're still relevant. They can be essential for certain transactions. Here's how they work and some scenarios in which they still come in handy.

How a Checkbook Works

A checkbook is comprised of a series of checks that can be used to make purchases, pay bills, or in any other situation that requires payment. With the advent of online commerce and banking, more people are making purchases and paying bills online, thereby reducing or eliminating the need for paper checkbooks.

Checkbooks include a set quantity of numbered checks and usually contain some type of register in which users can keep track of check details and balance account statements. Before being handed over in exchange for goods or services or any payment, a customer must fill out certain information on the check and then sign it. The information to be filled out includes the date, the name of the individual or business, and the amount of funds to be withdrawn.

Real-World Checkbook Example

Bob went to his local bank and opened a checking account. He made a starting deposit into the account of $3,000. Bob was issued a checkbook with 100 checks which he can use to pay funds from the account to providers of goods or services.

After Bob fills out the check with the payee's information, the payee must then deposit the check into their own bank account. The receiving bank will contact Bob's bank to verify funds are available and clear the check. The funds will then be debited from Bob's bank account and credited to the payee's account. Bob can then balance his checkbook on the provided register, writing in the amount he paid for the good or service, and then deducting the amount from his total bank account's funds.

Why Checkbooks Are Becoming Obsolete

With the advent of the digital age, checkbooks have become obsolete. A person can have a checking account without ever actually having to write a check. Transactions can now be done with credit cards, payments made via online bank transfers, and money exchanged via numerous tech startups offering such services via mobile phone apps, such as Venmo and Paypal. On rare occasions a check is still required, such as paying rent, which requires writing a check out to your landlord.

Despite becoming obsolete, checks do provide some advantages. Often in the fast-paced digital world, we pay for transactions and then forget about them. The old method of balancing your checkbook, noting how much you've spent and how much money is left in your account, is an excellent way to budget and keep a record of your spending habits. This can lead to cutting out unnecessary costs and saving more.