Higher Fees Are Urged to Reduce Use of Checks
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WASHINGTON — A top Federal Reserve Board official said Thursday that U.S. banks should charge more for using checks so more Americans would switch to more efficient electronic funds transfers.
“Although significant progress has been made in making the check collection system more efficient, the check is still one of the more expensive instruments to use,” Fed Vice Chairman Manuel Johnson said during a speech to a banking conference in Williamsburg, Va.
Johnson said paper-check use continues to grow even though they cost more than twice as much to process as an electronic funds transfer.
A principal reason for their continued popularity is because check writers benefit from the so-called float during the time it takes for a check to be processed, he said.
Because of the float, the funds covered by a check can remain in an individual’s account for days, earning interest or preventing an overdraft.
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