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10/29/2004 09:24:42 PM · #1 |
Learn what Check 21 is and why it will affect you. Started yesterday.
Checks that you write may be cleared in a matter of hours. Checks that you received from your paycheck maybe held for days. Bounce checks may happen more often if you don't keep your balance in check(no pun intended) |
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10/29/2004 09:35:51 PM · #2 |
I work in the IT department for a multi-bank holding company, so I am familiar with the changes brought about by the Check Clearing for the 21st Century Act (aka "Check 21").
Checks will not clear in a matter of hours, as the check would still need to go to the bank of first deposit's proof operation to be balanced and imaged. Checks may clear as quickly as overnight though, even if the check is presented at a bank across the country. This is because the bank at which the check is deposited no longer needs to send the actual physical check back your bank, but may instead send an electronic image of the check (if your bank is equipped to accept them) or an electronic document called a "substitute check," which is the legal equivalent of the original. Because of this possibly faster clearing time, you should never write a check unless the funds are available in your account at the time. Of course, it is illegal to write a check for which funds are not available, but in reality many people "play the float." If you are one of these people, be aware that you may be in for a very unpleasant surprise with Check 21.
Also be aware that if you are accustomes to receiving your original checks with your back statment, that you will no longer receive them all back. This is because your bank will no longer receive back all the originals of the checks you write, and they of course can not give you something they don't have. This is not something you or your bank can "turn off," as the bank is legally obligated to to accept a substitute check in place of the original.
If anyone has any questions about Check 21 after reading the above article, please feel free to post them here. I will do my best to answer them.
-Terry
Message edited by author 2004-10-29 21:36:23.
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10/30/2004 08:34:53 AM · #3 |
| What did faidoi mean when he said paychecks will be held for days? Wouldn't they clear the same way? a check is a check type of principle? |
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10/30/2004 08:49:17 AM · #4 |
| I think he meant that there is the possibility of a human element here. Overdraft charges are a great source of revenue for banks. So the temptation would be to rush the withdrawals and stall the deposits. Only by an hour or two could make a difference. For example they could have a policy of processing withdrawals as they come in during the day, but processing all deposits at once at the end of the day. |
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10/30/2004 09:38:57 AM · #5 |
What I want to know is if the banks are applying the same rules to my deposits as they are to my checks.
IOW when I deposit a large check, will my bank still place a hold on those funds, even though they can now process that check faster? If not, why can't checks that I deposit be cleared with the same expediency as checks I write? |
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10/30/2004 09:44:51 AM · #6 |
| Yes. My bank does say available funds and actual funds. They have to note that the deposit was made, but it clears at midnight or something. That's why I never use their deposit machines. Then it takes up to three days to clear. Thanks. |
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10/30/2004 10:43:30 AM · #7 |
deposis are not handled in the same manor, like pay checks or a check from grandma. The laws and rules reguarding deposits are different and banks have 4 to 11 days to process them. But many banks dont follow that rule as it is a customer service item that banks compete against each other with to win your business.
But when you buy somehting using a check the merchant will get your money much faster.
I have not written a check to a merchant in YEARS, 95% of my transactions are done with my ATM/check card. There are a few creditors that I still have to write a check to because they dont accept electronic payment via my online banking.
and yes I make sure I have a buffer in my account incase the trip to the grocery store cost more than I expect.
James |
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10/30/2004 11:18:08 AM · #8 |
Originally posted by emorgan49:
I think he meant that there is the possibility of a human element here. Overdraft charges are a great source of revenue for banks. So the temptation would be to rush the withdrawals and stall the deposits. Only by an hour or two could make a difference. For example they could have a policy of processing withdrawals as they come in during the day, but processing all deposits at once at the end of the day. |
I use a credit union, and when using my debit card, the deduction from my account happens when my bank gets the charge notice (could be 2 or 3 days if i use the debit card as a visa). You buy friday afternoon, the credit union sees it tuesday morning, the actual deduction is made on tuesday morning against your tuesday balance.
I got another account at a local regualr bank with direct deposit of my paycheck. They way they do it, is regardless of when they see the charge at their bank and how much money you have in their bank, they deduct the money at the time and date of the actual purchase - so you charge friday afternoon, they bank sees the charge tuesday morning, but makes the deduction against your friday afternoon balance.
Now to add fun to this, the CU's website is behind no moar than 6 hours. The bank will run behind by 2-3 days, and then take 2 weeks to maiol you an overdraft notice...15 years of no bounced checks, and this new bank got me 5 times in 4 weeks (at $35 a clip no less). There is no way to retroactively make a deposit....
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10/30/2004 11:59:36 AM · #9 |
| I gave up on regular banks because of things like that several years ago and now only go through my credit union. They do have their own quirks though. For example the closest branch to my home is a cashless branch. They don't keep cash in the bank so you must use the ATM outside their doors. Any deposit to the ATM takes 3 days to clear but if you make the deposit (non-cash) inside they credit your account instantly. So if you're running low a particular month and get a check you can go inside to deposit it and go outside and withdraw the money. |
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10/30/2004 12:18:11 PM · #10 |
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Message edited by author 2004-10-30 13:11:23. |
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10/30/2004 04:31:55 PM · #11 |
just make sure to only spend what is in the account and keep a record of everything spent -- and the change in the law (and banking policies) becomes a mute issue. **shrug**
I've been stung too many times in the past to play games with the bank based on what I 'feel' they should or should not be doing with my money.
David
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