Posted on 10/28/2004 7:57:34 AM PDT by SmithL
NEW YORK (AP) --
New federal regulations designed to speed up the processing of checks went into effect on Thursday, and consumer advocates advised Americans to be more vigilant about monitoring their accounts.
The Check Clearing for the 21st Century Act -- better known as Check 21 -- will allow financial institutions to exchange electronic images of consumers' checks rather than transporting the actual paper checks around by air, land and sea.
As a result, checks that consumers write are likely to clear faster than before, so there will be less "float" between the time a check is written and when funds are debited from the account.
And consumers who still get their checks back with their statements -- about 36 percent of bank customers -- are likely to begin seeing images of some checks among the paper ones.
The changes won't happen overnight.
Forrester Research of Cambridge, Mass., estimates that it will take until the end of the decade for banks and credit unions to digitally process checks from start to finish. It said that some major banks won't have fully implemented image exchange processes until about 2008.
Still, consumer advocates warn that if check writers aren't careful, they could easily overdraw their accounts and end up paying late fees and other penalties.
(Excerpt) Read more at sfgate.com ...
That is incorrect. The Federal Reserve processes some checks, but not all. Many banks, especially those close to one another and virtually all large banks have "direct presentments", in which they bypass the clearing agents. Also, many community banks (such as the one I work for) share regional data-centers that act as mini-clearinghouses. There are also larger regional clearinghouses that bypass the Fed. Part of the reason is that the Fed is generally the most expensive of the clearing mechanisms available.
Small or big, banks are businesses. We are not doing things as a public service as many want it done. True we are regulated, but that doesn't make us public property.
Small or large we are entrepreneurs.
All in all though, Check 21 will be good for large and small banks, and will better serve the public at large, including your customers and mine.
I guess you are saying those vans also would make local stops after the planes were met with the bags routed for local banks? Makes sense. I guess that's why when you pay your bills for satellite television or credit cards, the PO Box is not too far away even though the company is? I guess they maintain PO Box's and an agent in every region in order to speed up the processing time at minimal expense.
The attitude is what I'm talking about. When you say that's just the way it is, that's the way the large banks have made it - and then they wonder why they have a hard time holding on to their customers.
Big banks upped the bar so small and large and all sorts of banks can provide better service and to deregulate their own industry.
blackdog,
You got it. Also, there are a significant number of checks that never need to be flown anywhere. For example, checks that are drawn on and deposited or cashed in other banks that use the same data center that my bank uses are cleared via ground courier runs from the member banks to the data center. They probably account for about 25% of our check volume. Many of the larger banks have very sophisticated models on which checks to send where for clearing based on the routing information. It really is a science.
Blah blah blah blah blah blah blah...So because banks have developed advanced methods of screwing their customers, I should just put some ice on it? I worked with bank marketing for large banks for years. It was the ultimate oxmoron. What do customers want from their banks? Lower fees, better service and more locations. What do large banks offer? The opposite. How do you sell it? Thrash around like a drowning sailor for six months, and then buy another bank to make up for the declining market share. Meanwhile, regionals such as Commerce Bank are buying up the locations that other banks closed because they were unprofitable and are keeping those locations open seven days a week and are growing like a weed.
You can blah blah me all you want. It doesn't work on me, I've been there, seen that, helped peddle the nonsense.
Get a checkbook that makes automatic 'carbon' copies.
I can count on one hand the times I've needed a cancelled check to prove something. Oddly enough, the last time was to General Motors over getting reimbursed for paying for recall work. It turns out there are lots of people out there in the business of defrauding recompensation programs of major corporations on recalls, rebates, and high dollar refunds. In other words, the same people complaining about consumer abuse are the same ones causing it.
Consequently, we haven't bounced a check since the fourth month of our marriage, back in '91. Talk about a coincidence!!!
Mine has a $25 bounced check fee – and most stores have $35 – 50 fees.
Bounced checks are costly.
We do nearly everything with either cash, debit card, or electronically. If we write 5 checks in a month that is a lot. And since we switched to that plan, we haven't bounced a check!!
So because we so rarely write checks this new rule doesn't impact us personally - my gripe is that banks aren't required to do the same for customers....like making funds immediately available.
According to the FRB's FAQ on Check 21, the "substitute check" is legally equivalent to the orginal, and the original may be destroyed.
"Mr. Romney Wordsworth! You are obsolete!"
My bank has recently started posting images of the checks online. You can look at both sides to see endorsement and bank stamps and print it out, if need be.
AIUI, banks will still have THEIR float time, but the money will be debited faster. Be sure the banks will continue the practice of milking every penny from your money before paying it out...there will just be a period of time between when it is your money and when it becomes the payees money...while it is essentially the bank's money.
Millions and millions of expensive lessons are about to be learned.
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