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 ...
oh puuullllllezzzzzz
every adult knows that transactions are made overnight...
welcome to the 21st century...
and if you think it takes 3-5 days to complete a transaction then you are in for a rude awakening
for over 20 years I have seen checks clear overnight from banks 3000 miles away from each other...
banks have been screwing their depositers for decades
and for over 20 years I have had to call my bank to have funds released because the check had already cleared days in advance of the "hold"...
Every time I used a good local bank, within six months they were bought out by First Union, Wachovia, etc......Fooled too many times.
Thats a different system all together and doesn't at all refer to Check 21.
The service refered to @ Wally World can be signed up for by individual vendors as they see fit. When they get sick of taking hot checks, they tend to sign up and get the machines that perform that function.
Again, thats been around almost as long as the debit card.
Check 21 is different.
My point precisely. They can't hold your deposits for five to ten days under this rule can they? Or is it only a one party screwing?
They have. Its called direct deposit.
It is also called Check 21.
Check 21 isn't though 'immediate' either way, debiting or crediting.
The same 'float' technically exists, its just a much shorter time frame to either collect or pay items. Instead of 5 days we are looking at 1 maybe 2.
That system is a vendor option...kind of like chosing if you want to accept credit cards or not...its not Check 21.
I wonder if this rule applies at all to offshore banking? The first thing congress does is exempt themselves and their associates from any rule or law. Look for a real uptick in offshore banking to avoid the laws.
Yes, banks will continue to delay your deposits as usual. They will only hurry to take money out of your account.
Here in L.A. this change occurred over 7 months ago.Bank destroys the checks and sends you sheets w/ photocopies of the checks.
I wrote a check at a charity thrift store the other day and they took the check, ran it through a machine of some sort, stamped "VOID" on it, stapled my receipt to it and handed it back to me. They said they automatically debited my account and didn't need to keep the check.
It cleared my bank just like it would if I'd used my debit card.
Sure, that works fine for your paycheck, but I have my own business. Took a check a few months ago from a customer who wanted some computer networking equipment set up at his home here, but since he's a truck driver, he paid with a check from an out of state bank. Now, nothing was wrong with the check, but I wasn't dead sure about that for a while.
Good thing I never learned to depend on the "float". Just to be sure, I added an automatic line of credit on my personal checking account, the interest I'd pay is way less than bounce fees, for sure.
The float period in which your bank has the funds from a check you deposited, but is on hold for five business days
Thats wrong, has always been wrong, and never will be a correct description of whats going on or what has gone on in the past.
Thats not what it is, or ever will be or has been in the past.
A hold can be placed on an item in between when you give the teller the check and when the other bank gives your bank the money.
Handing the teller a check, despite what you think about it all, is not getting money into your account. The transaction to put money into your account does not take place at the teller window (except cash).
When the bank has that 5 day hold (for example) it means they have NOT collected the funds from the other bank. They are simply not letting you use money that you (and the bank that you deposit into) have not collected yet.
You can wish it for all your life that handing a teller a check means that 'the transaction is done', but its never going to be that way.
My husband's paycheck is electronically deposited twice a month................several months ago the bank changed it's policy. Electronic funds are no longer immediately available via the ATM for cash for 3 business days. They will honor anything presented electronically, but he can not go into to the bank and get physical cash.
That bites on the weekends........he gets paid Friday, because Tuesday is a holiday there is no access to cash until Wednesday.
Thank goodness the supermarket allows you to get cash back!!
In the old way, say you live in Florida and got a check out of California...
By Law the bank could place a hold for 5 days in an effort to hold down fraud. Often time collecting those funds from bank to bank would take the whole 5 days.
Under Check 21 you should get those funds credited and collected in 2 days.
There is still a collection time, but its just shorter, a lot shorter.
Over the next several months your out of state checks will clear a lot faster and instead of 5 days holds, you might see only 2 day holds in its place.
Check 21 is speeding up the system...
My Visa company has been doing this for months. They receive my check in the mail and immediately convert it to an electronic transfer, as in debit account. I don't even get a canceled check.
The fact is, banks are giving immediate credit based on your relationship with them.
If you have $5000 in your account they won't place a hold on a $50 check from out of state... so they just give immediate credit.
The funds still are not collected for that time frame sometimes.
It all depends on who we are talking about. Some banks' proof departments work faster than others...
I disagree. It shouldn't have taken more than two days. The other three days, the bank gets to play with my money interest-free.
Likewise, Check21 might get me the money in 2-3 days. But the bank will get it within a day. So they still get to sit on my money.
I used to fly checks. I know. The issue is more legal than cleared funds. Banking laws allow certain windows of banks being able to charge other banks back based on stop payments, lost checks, and goofed entries. That's that hold period. They also do not get processed by the banks, they are processed by the federal reserve.
I've had $181,000 show up in my checking account mysteriously and then a day later it's gone. I've also had all the bad checks written to Kroger's applied to my account making me $18,000 overdrawn. They have software programs they run to fix and reconcile these errors, but it takes a few days. It prevents me from withdrawing the $181,000 from my account and not giving it back. The five day hold period is really a time to fix things window. I once asked for a stop on my EFT mortgage payment two days after it transacted. The bank said they don't like to do it, but no problem. They did. That five day window allows them to yank it right back out.
I figured as much.
If you have $5000 in your account they won't place a hold on a $50 check from out of state... so they just give immediate credit.
Nice try, but no stogie. They don't give you next-day credit for that $50 check out of the goodness of their flinty hearts. They give you next-day credit because the law says they have to clear $100 of the check next day.
Any other pro-bank spin you want to present here?
You can either rent, lease, or purchase the equipment. One bad check avoided and its paid for itself.
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