Aces High Bulletin Board
General Forums => The O' Club => Topic started by: rpm on October 28, 2004, 11:49:50 AM
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source (http://www.usatoday.com/money/industries/banking/2004-10-27-check21_x.htm)
What is Check 21 and why was the law passed?
Check 21, short for Check Clearing for the 21st Century Act, will let banks and other financial institutions exchange checks electronically, using high-quality reproductions of original checks.
In the past, banks had to physically transport checks across town or across the country before they were cleared. After the Sept. 11 terrorist attacks shut down air transportation for several days, the Federal Reserve Board pushed for changes that would make the financial system less vulnerable to disruptions.
What will it mean to me?
Not much at first. Many banks haven't implemented the technology to start processing check images electronically. The changes will be gradual.
Eventually, though, the law is expected to reduce the "float" — the one-to-five-day window between the time you write a check and the time the money is withdrawn from your account. In the past, many consumers used the float to carry them over until payday. Now, there's a greater chance those types of checks will bounce, triggering hefty overdraft fees.
I never use the float. Should I be concerned about Check 21?
Maybe. While the law will speed up the time it takes the checks you write to clear, banks won't be required to reduce the "holds" they place on deposits. Those holds range from a day to more than two weeks, depending on the type of deposit. The checks you write against your paycheck could bounce if they clear while there's still a hold on your deposit.
How many banks are going to exploit this? If the check you write is processed immediately, the deposits should be as well. This looks like a good idea that someone said "how can we make money off this?"