Do you write checks?

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M Gravlee

Well-known member
Dec 20, 2003
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Perdido Key FL USA
If you write checks you need to read this post I copied from

As of 28 October it will no longer be possible to float a

I know that we would never do that, but just in case you
know someone who might try please read this. A new law goes
into effect on 28 Oct and all checks will be cleared
electronically within minutes...even at night, even on
weekends. If payday is Monday and you write a check on
Saturday assuming it won't clear before your paycheck is in
you will be wrong-that check will bounce. And you will be
charged overdraft fees.

Be aware of what you are doing and the affect it could have
on your credit rating or career. Make sure funds are
available before you write a check.

"Check 21" starting in late October You've probably bought
something in a store with a check even though you don't have
the money in your account at the time. You figure you have a
few days for the check to clear, and by then the money will
be there. It's called the "float." Well, the float is slowly
becoming a thing of the past. Because of a new law going
into effect in October, money will be drafted from your
account immediately when you write a check. It's called
"Check 21," and it allows retailers to scan your check
through a machine that deducts the cash within minutes. It's
essentially the end of the paper check system, as well,
because the check will eventually be destroyed. There will
be an image of the check online and that will serve as proof
if you need it. But everything is becoming electronic, and a
bank will know if a check is good right away. So, be
prepared to move to an electronic bill pay system. It's the
smart way to go. What about checks that you deposit? Well,
the float is no longer available to you, the customer. But
the bank still will hold a deposit for a few days to make
sure it clears. It's not fair, but it's the way it's

What are the main effects of "Check 21" on consumers?

* You won't be able to get your original paper checks back,
because your bank will no longer have them.

* Checks you write will clear sooner, increasing the risk
that a check will bounce if funds are not in the account
when you write the check. Don't write a check unless the
funds are already in the account to cover it.

* You may not get access to the funds from checks you
deposit any sooner, because the new law does not shorten
check hold times. After 30 months, there must be a study on
whether banks are making funds available to consumers
earlier than the allowable hold

* Banks will save money on processing checks, but banks are
not required to share these savings with consumers.

* Different kinds of copies of a check will have different
rights attached. Check 21 creates a new kind of paper copy
of an electronic image of a check. This special kind of copy
is called a "substitute check." Only a substitute check can
be the legal equivalent of the original check, and only a
substitute check triggers your right to recredit of disputed
funds. A regular copy of a check does not carry these same
protections. If you ask for a copy of a check, your bank may
send you an ordinary copy instead of this special kind of
copy which triggers legal rights and protections unless you
ask for a substitute check.

* A bank other than your bank will have your original
check, and will decide whether to destroy it. Neither Check
21 nor other law requires a bank to keep your original check
for any period of time. Before Check 21, your own bank
decided how long to keep your original checks, if you didn't
get them returned with your statement. Under Check 21, the
bank of the person you wrote the check to may decide when to
destroy your check.

* Consumers will get new rights for some electronically
processed checks, but not for others. When a so-called
"substitute check" is provided to a consumer, Check 21 gives
the consumer a right to have funds of up to $2,500
recredited to the consumer's account in 10 business days if
the check is paid twice, paid for the wrong amount, or
otherwise paid in error. The statute is ambiguous about
whether this new right applies when a paper substitute check
is used in the processing of the check but is not returned
to the consumer. The regulations restrict the right of
recredit only to checks where the consumer was provided with
a substitute check. If a check is processed electronically
by all the banks it is routed through without the use of a
substitute check and the consumer is not provided with a
substitute check, then the check remains under state check
law. In that case, the consumer does not receive a 10 day
right of recredit even if the electronic image of the check
is paid twice, paid for the wrong amount, or if both the
electronic image and the paper check are paid.

* Consumers who want to maximize their consumer rights
should ask for return of "substitute checks" with their
checking account statements. Watch out for fees associated
with a substitute check-returning account. Look for another
bank if your bank charges a high fee to get copies of all
your checks as substitute checks.

* Only the special "substitute check" can be legally
equivalent to the original check to prove payment. The
copies that a bank sends to consumers under a so-called
"voluntary truncation" agreement, where the consumer agrees
not to get the checks back, do not prove that a payment has
been made, and do not trigger your Check 21
recredit right.

When do these changes go into effect?
Check 21 becomes effective October 28, 2004.
Thanks Macon,
Been hearing on tv about not being able to float, but this is the first I've seen it explained.
I learned about using a debit card and online banking for paying bills last year. For those who don't know, debit card from your bank is used in place of writing checks. Swipes directly from your account and every night you can log on and see your balance.
Guess what? The bank will still take its good ole easy time to process your deposit! That's why I switched to Credit Union, your deposit is credited right then.
Thanks for letting me know this. I have been bad about doing this a day or two before payday. YIKES not anymore. Will save me service charge knowing this now.

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