Canceled Checks, 'Float' Soon To Disappear

[Digobick]

Those of you who write checks a day or two before the money is actually in your account will soon have a rude awakening. Starting in October, checks will be processed almost instantly instead of 1-3 days later:

Every night, millions of cashed checks fly around the country, headed for their home bank. Starting in October, technology will start to ground many of those flights. And it may ground some consumers, too ? those who try to sneak an extra day or two of "float" out of their checking accounts.

Consumers trying to stretch their money have become accustomed to taking advantage of "the float," the time it takes after they write a check for banks to deduct from their accounts. It's a bit of a secret loan, but it's about to be shut down for good.

Also about to be historical artifacts: bank statements packed with canceled handwritten checks.

The new era of banking begins in October. Banks will slowly get away from the business of flying checks around the country each night. Instead, checks will be cleared electronically, and often destroyed when they are cashed.

Link

 

[George P Burdell]

edit: i got a friend who keeps screwing up financial stuff.... like the last summer he wrote a $100 check to someone and turns out that his account is already at -$83. then he tried depositing a check into an ATM and screwed that up somehow, so he had to run around asking ppl for cash to deposit into his account.

gotta send this link to him.

 

[jadinolf]

Thanks for the info.

 

[desteffy]

I have been getting scans of checks instead of cancelled checks for almost a year, I use TCF bank. Also, wont this be about the same, or better for people? Because normally if you cash your paycheck, you may have to wait a long time for the check to clear and the funds to be avaliable, and now wont this mean that the funds will be there almost right away?

I mean even if you wrote a check to someone before the money was there, and they cashed it, and you added money to your account by cashing a paycheck the next day, you get fees if your paycheck dosent clear before the other persons check draws from your account, so you'd still be screwed unless you deposit cash.

Thanks for the info though, this is interesting.

 

[Aves]

A lot of places these days take the money immediately. You hand them a check and they hand it right back. Basically it's just like a debit card.

 

[desteffy]

Originally posted by: aves2k
A lot of places these days take the money immediately. You hand them a check and they hand it right back.

I know you can cash your check and get money back for it, but dont they usually draw it from the avaliable funds in your account? I remember being at the bank the other day and some guy was cashing a check for say, $500, and he wanted it in cash, but they were saying his account only had $100 in avaliable funds at the time so thats all he could get back. He could not have his $500 until he cashed it and it cleared. So often when you "cash" a check at your bank, you are really depositing the check, and withdrawing money from your account.

 

[Aves]

Originally posted by: desteffy

Originally posted by: aves2k
A lot of places these days take the money immediately. You hand them a check and they hand it right back.

I know you can cash your check and get money back for it, but dont they usually draw it from the avaliable funds in your account? I remember being at the bank the other day and some guy was cashing a check for say, $500, and he wanted it in cash, but they were saying his account only had $100 in avaliable funds at the time so thats all he could get back. He could not have his $500 until he cashed it and it cleared. So often when you "cash" a check at your bank, you are really depositing the check, and withdrawing money from your account.

What I'm referring to is having the check processed immediately. A friend of mine bought a book and wrote a check. Rather then keep the check, send it off to have it processed and get the money at a later date, the bookstore used the account info on the check to do an EFT and move the money from his account to theirs instantly. They had no use for the check anymore so they just handed it back. If his balance weren't enough he wouldn't have been able to make the purchase.

 

[DrPizza]

I believe that's old news... some banking is already done like that... for other banks, it's not so fast. It's not mandatory that all banks use that network, and many credit unions, for example, don't.

My local bank doesn't bother returning cancelled checks to me. But, they've improved on the old ways: rather than receiving cancelled checks once a month, all of my checks are scanned on the front and on the back and available online immediately after they clear. It's pretty nice... balancing the check-book has become pretty much a thing of the past as it's all there automatically for me...

 

[LTC8K6]

Ahhhh....Check kiting, as in kite flying. Reminds me of my days in the Army. A great pastime in the military. People just loved to race their direct deposits with kited checks.

 

[NFS4]

Old Navy has been doing this for at least a year. I RARELY write checks, but the few times that I have at Old Navy, they ran my check through and handed it right back to me stapled to my receipt

 

[desteffy]

Originally posted by: aves2k

Originally posted by: desteffy

Originally posted by: aves2k
A lot of places these days take the money immediately. You hand them a check and they hand it right back.

I know you can cash your check and get money back for it, but dont they usually draw it from the avaliable funds in your account? I remember being at the bank the other day and some guy was cashing a check for say, $500, and he wanted it in cash, but they were saying his account only had $100 in avaliable funds at the time so thats all he could get back. He could not have his $500 until he cashed it and it cleared. So often when you "cash" a check at your bank, you are really depositing the check, and withdrawing money from your account.

What I'm referring to is having the check processed immediately. A friend of mine bought a book and wrote a check. Rather then keep the check, send it off to have it processed and get the money at a later date, the bookstore used the account info on the check to do an EFT and move the money from his account to theirs instantly. They had no use for the check anymore so they just handed it back. If his balance weren't enough he wouldn't have been able to make the purchase.

oh cool I didnt now about that.

 

[fredtam]

I use a debit card anyway but my wife's tenants are fvcked.

 

[tk149]

Because I'm feeling anal, let's try to clear up some misconceptions:

1. The new "Check 21" Regulation is NEW. Your bank, your local grocer, and Old Navy have NOT done this before. They've been doing something completely different.

2. Check 21 may or may not result in a shorter "float" time. It really depends on the banks involved (and there can be several banks involved in every check you write) and whether they choose to participate in the faster Check 21 imaging transmission process.

3. The only thing you, the consumer, are going to notice about Check 21 is that you'll:
A. Find some checks clear faster (both deposits and withdrawals), and
B. You'll either receive paper duplicates of checks you wrote (with images of both the front and back of your original check), or you'll receive images of the paper duplicates. I believe they'll be marked as "Legal Substitute" or something to that effect.
C. You should be receiving something in your checking statements soon with more Check 21 information. If not, your bank is probably guilty of a reg violation.

4. This is going to make my job of detecting fraudulent checks considerably harder. :|