Change in check processing this month means no more floating checks
Monday, October 18th 2004, 10:01 am
News On 6
The events of September 11th changed a lot of things in America. The latest begins the end of this month. It is called "Check 21", short for Check Clearing for the 21st Century.
In a consumer report, News on 6 reporter Rick Wells tells us how it will affect you and me.
When we write a check it begins a trip that can take several days. Eventually going to one of 300 processing centers across the country. Lots of people get their hands on it. It may even take a plane ride on the way back to the bank and eventually to us in our monthly statement, that's the way it's worked for years, so why change that.
Vane Lucus: "There's an on-going trend in the industry to get the paper out of processing and make things more efficient." The biggest reason is a response to the 9-11 attacks, airlines were grounded. Payment of millions of checks was delayed, everything slowed down. "The Fed wants to avoid a repeat of that scenario." So banks will be permitted to process checks electronically. So a check you write will enter the system faster.
If you are in the habit of floating checks, you know writing them before there's actually money in the bank, they may bounce. Susan Grant with the National Consumer League: "your checks will be processed alot faster you can't count on the float anymore. That means when you write a check you need to have the money in the bank to cover it."
Yes, but even the experts tell us in the beginning most banks will be slow to convert to electronic processing and the float is safe for a while. And those nationwide check processing centers will continue to sort, separate, and ship as many as 2-million checks every day.
The new law goes into effect October 28th, but some banks may take a while to begin electronic check processing.