Float Time on Checks Shortens, as of Thursday

[LiviaOlivia]

The New York Times
October 28, 2004
Float Time on Checks Shortens, as of Thursday
By JENNIFER A. KINGSON

Consumers who have become used to writing checks in the expectation of having at least a couple of days to cover them with a deposit may soon be in for a rude awakening.

Under a federal law that will take effect today, banks will have more leeway to process checks electronically, and this will translate to shorter or even nonexistent float times - the grace period between the time the check is written and when the money is debited from the account.

As banks start to make digital images of checks, shred the originals and use the images for processing, customers are likely to see several changes besides the faster clearing. Consumers will receive fewer of the original checks in their bank statements and more paper substitutes, which will be printed when checks are handled the new way. Most banking customers already receive statements with images of their checks or lists of them.

But the new law, which is called the Check Clearing for the 21st Century Act and known as Check 21, does not change the length of time that banks can hold checks deposited by their customers. And it is this mismatch between existing check holds and the prospect of faster clearing that has helped turn Check 21 into a focal point for consumer groups, which have added it to a list of grievances against banks.

<snip>

http://www.nytimes.com/2004/10/28/business/28float.html?hp&ex=1098936000&en=636c8c3ca98b7eb4&ei=5094&partner=homepage

[candy331]

1. The average people are screwed once again.

But the new law, which is called the Check Clearing for the 21st Century Act and known as Check 21, does not change the length of time that banks can hold checks deposited by their customers.

[robcon]

9. This is great news for consumers, and terrible news for banks.

Checks will clear much earlier - that's a great consumer benefit.

[denverbill]

19. Are you nuts?

Explain how exactly it benefits customers to have banks take money from their accounts sooner but not deposit funds deposited by check to their account any sooner? If I deposit $100 in my account right now, then walk across the street and write a check for $10 for groceries, it means the check can immediately be debited from my account even before a paper copy reaches the bank, but the bank can hold the $100 I deposited for 3 days before releasing the funds. How does that benefit me?

[FlaGranny]

20. Uh, I don't think so -

all this means is that the bank gets longer to "use" your money. In other words they are charged against your account faster, but any check deposited can still be "held" from your use, even though the funds have been "cleared." How is that a great consumer benefit? Open an account, put in your paycheck, the bank has the funds transferred within a few hours, but you're not allowed to touch those funds for five days.

Edit: Fortunately, I've been with the same back sooo looong that they don't do this to me any more. All deposits to my account are credited the day they are made. This is the main reason why I would never think of changing banks for lower fees. Once you've been a customer long enough, most banks no longer "hold" your deposits. I once even had a bank that "held" cash deposits. I was young and foolish and wrote checks to pay bills and was hit with a half dozen "fees" for bad checks.

[SemperEadem]

32. the way around it, especially if the paycheck is written on an

account by the same bank which you bank with: Cash the check and then deposit the cash into your account. That's what I had to do to stop them from holding my funds from my paycheck---it pisses off the teller, but fuck them... if they did what was right in the first place, I wouldn't have to make them do their job when I came in.

[nolabels]

33. "it pisses off the teller, but fuck them..."

Tellers are trained to act pissed off when the banks start losing on the deal, it's not explicitly stated, just known by instinct.

It's even better when you go down in person and draw large sums out of their bank to to deposit in another bank :D

"it pisses off the teller, but fuck them..."

[grackle]

53. Tellers don't make the decisions that piss you off.

They are average people just like you and me. They are under pressure to offer you new bank services but they have no personal "instinct" what-so-ever to do anything but balance their drawer at the end of the shift and go home.

BTW, which other bank are you talking about? They all have, by and large, the same policies. My advice to all DUers - find a banker and/or teller that you like regardless of which institution it is. I reverse bullshit fees all day long for people. There are kind, democratic, helpful bankers out there. Non of the anecdotal evidence i've read in these postings is a problem for any of my customers.

Quite frankly, i'm not sure how Check 21 is gonna play out (i'm not that smart)but i do know that i will find a way to help people regardless of it's consequences.

[nolabels]

56. Dang it , I wassssssssss just kidden

I only wish that I was taking larger sums of money from an account in my name. Besides my wife does most of the banking now-a-days.

Really I was just responding to what seemed a quite cavalier but still humorous post

[napi21]

51. If your paycheck is on the same bank as yours, you have no problems

Neither the money nor the check ever leave that bank! Just deposit your check and you'll be fine. The funds will credit your account the same day.

I don't understand what you mean by them holding your funds? Please explain.

[SemperEadem]

31. wrong--it's anti consumer... fair would be them handling deposits

with the same expediency that they do debits--it's aimed at being able to make more money off of customers through increase of fees charged to their accounts. If they truly walked the walk of their rhetoric, they would offer to put their own lax methods of holding processing of deposits under scrutiny to speed up what they do.

Once again, big corporations/big business/big banking get an increase in their 'welfare' at the expense of We the People.

[ElWood]

42. Let's not forget...

... the extra interest the banks will earn on their investment of our $$$ for those extra few days they didn't have before.

ElWood

[mountainvue]

13. Of course not.

Everything benefits the corporations.

[Bandit]

24. I can't see how this benefits Corporations

Most corporations are just Ma and Pa operations that operate very much the way you do. They sned their receivables into the bank for deposit and must wait the required amount of time for those checks to be deposited in their accounts but the checks they write to pay their vendors are deducted immediately. It can be very much a problem for corporations who often experience cash flow problems.

[Trillo]

46. The secondary issue as I see it--no auditable original paper

if originals are shredded; if not shredded, then no orignial paper under the immediate control of the check writer. (the first issue was 'acceptance' of confiscation of private property as 'normal' and buisness as usual)

Digital images can be altered. The argument closely analogizes with not having 'paper ballots' as an auditable record of voting. Of course, the scale of any potential fraud is much smaller than the voting issue, this issue affecting only those who might be subject to some sort of 'targeted abuse', even if that abuse is mere incompetence.

Since I do write checks along with using debit ATM, I'm thinking it would be a good idea to have the buisness style checks where a carbon copy of the original writing is made. I think they still have those....

Having the original check as cashed by the receiving party is best for consumers.

On edit: So this measure puts control of records in the hands of bankers, and by so doing, control of proof in thier hands (where it should not be) instead of the hand of the person or buisness whose money is thereby represented: where it should be.

[Bandit]

58. Banks have been giving paper copies of checks for years

I have not received back from the bank a real check in several years and virtually every Corporation uses voucher checks printed from a computer program. There is record in the computer of the check and the most important thing we usually ever need from the bank is a copy of the endorsement on the back of the check. I have never had any problem receiving this from the bank when requested. This electronic handling of our money was inevitable but it does indeed shorten our float time.

[Pirate Smile]

2. God, I hope they let people know this. You know there are going

to be checks bouncing all over the land.

:bounce: :bounce: :bounce: :bounce: :bounce: :bounce: :bounce: :bounce:

[Mrs_Beastman]

48. CNN reported banks stand to make about $137mill extra from this

and remember...it's part of the Patriot Act

[Trillo]

3. Not returning "original" checks is confiscation of private property.

Why? Because people pay for blank checks. I wonder if this new law was progressive enough to require banks to supply free checks for their customers?

[gmoney]

6. probably not...

I bet the checks are actually the property of your bank somehow... sort of like the software you pay for really belongs to Microshaft... you're just licensed to use it. Or the fact that you buy the mailbox, but the USPS owns it.

[truthisfreedom]

8. i purchase my checks from an outside vendor. they belong to me.

and my bank ALWAYS returns my original checks to me.

[donco6]

27. They won't anymore.

Just copies now. And it's not certain they will be accepted as proof of payment anymore. At least, that's what I keep hearing.

[Skittles]

61. and they are tiny copies too

I need a magnifying glass to actually read them

[Bandit]

62. No...Banks don't own the checks.

Usually you buy your checks from a company that creates business forms. Deluxe Business forms is probably the most common. All of my checks come from a business forms company. I buy them and own them but once they are issued they belong to the person or vendor that I send them to. They then give them to the bank as a form of IOU and the bank honors them. The bank can do anything they want with them after that.

[RebelYell]

7. Yep

I belong to a Credit Union and as of tomorrow, checks are free.

[Lugnut]

40. My credit union

Supplies me with free checks and my deposits are available immediately. I pay $1.00 per month service charge for the privelege of using one of their debit cards and that's it.

[Sara Beverley]

4. Republican aid to bankers. More ways to screw the working class.

Can you hear us now, red states?

[oldhat]

11. This doesn't screw the "working class."

I work in a bank. Check 21 will cut down on costly check kiting fraud and hard copy storage costs. It's good for the consumer and good for the banks. Bad for people committing bank fraud.

[booksenkatz]

15. I agree with you, except for one problem

Who is ultimately going to see those savings, I mean REALLY? All of those cost savings... will they trickle down to us, or will they go into the ample pockets of the bankers? That's what always bugs me -- we consumers so seldom truly, materially experience any "savings" in situations like this.

[RedTail Wolf]

52. Bankers get richer while working poor get screwed

I disagree that this should make people not write bad checks. Heck we all know you shouldn't write bad checks, but I used to own a small business I kept my accounts payable cash in a checking account that paid a small bit of interest. I used the float to make a little extra interest. I always knew when to float on payments. This not only sucks for people who live week to week as I do but it hurts business owners as well. This actually was a voice vote and was not even recorded. The lobbyists lined a bunch of pockets and it sailed through, then Bush salivated as he signed it as the banker's donated more cash to his campaign.
People who don't understand what I'm talking about are well off enough that this piece of crap legislation doesn't bother them. My sister n law is in worse economical shape that my family is and she is about to have a nervous breakdown over this. Why do the banks need a windfall in profits? WHY? We working middle class to poor working class will be the ones who pay the banks for this garbage bill.
Thanks again Republican Congress and Pres Bush for sticking it to the workin man!

New here but am a frequent poster at johnkerry.com .I wish I had joined earlier. I live in a very red state and have worked my ass off for Kerry. I have given more money to a political campaign than ever in my life , so much that it really hurts, literally. So we better win. Thanks for another great place to converse with liberals and progressives and like minded Democrats.

I am RedTail Wolf of Macon, Georgia

[Old and In the Way]

5. Funny how payroll checks don't get credited as quick as the checks you wri

I was talking about this very subject with the SO tonight. They never bounce the large check either...it's all the small ones that you get nicked on.

We pretty much use the debit card with overdraft protection for this very reason.

[lfs5]

10. Increase in OD Charged Expected to be $170-million a month....

EVERY DOLLAR OF IT COMING OUT OF THE POCKET OF SOMEONE WHO CAN'T AFFORD TO LOSE IT!
(Note: figure based on memory from WP article in late Sept.)

[oldhat]

12. Try not bouncing checks if you don't want to charged OD

Figure out how to balance a checkbook. Never being charged for an OD or NSF is as easy as the basic arithmetic and the grand total of about 10 seconds per day it takes to balance your checkbook.

If people bounce checks, that's their problem for being financially irresponsible, not the bank's problem.

[jayfish]

16. How Sanctimonious Of You.

Since your such a fiscal genius, why don't you give me some of that wonderful advice. I get paid two times per month, on the 3rd and 18th. My mortgage and auto loans are both due on the 1st. I need those extra days to make sure those checks get to my lenders on the 1st and funds are available for them. I have already attempted to have either due date changed. Do you have pious, Black & White, words of wisdom for me? Or should I just get used to being "financially irresponsible"?

Jay

[donco6]

28. Are you on direct deposit?

That would help. Our DDs are transmitted the day before payroll so they are credited to accounts on the day of payday (we pay 2x per month). If you get hard checks, it's going to take a while. I know, some people don't like DD, but it could end up costing you not to be on it.

[jayfish]

38. I Would Love DD....

Unfortunately it is not available to me. Employee wise, we are a small co. and our payroll is run in-house. I guess it's not cost effective to offer us DD. There has been talk of farming our PR out to a 3rd party, but so far it has been just that, talk.

Jay

TYPO=EDIT

[MostlyLurks]

17. Actually, that's not all there is to it.

In principle (or principal - dig it, my first bank-related pun), you're correct. However, there are a lot of banking practices that are designed to ensure that, if there's ever a possibility of a bounced check, the bank bounces it rather than covers it.

Here's an example.

Let's say you deposit a check to your own account at noon on Wednesday. That same day, you write a check out of your account. At the end of the business day, your check is deposited by the business owner.

Business owners get favorable treatment at most banks. One of those favors is that their deposits can be turned in later than a regular consumer. In order to do this, the bank will run business deposits/transactions before personals.

So, the check you wrote to the business owner will usually be deposited, sequentially, before your deposit can. If it so happens that the check is for more than your account holds (remember, your deposit hasn't been recorded by the bank yet), you've bounced the check. The bank makes no determination as to "same day" considerations or that fact that your deposit was made chronologically before the check was held against your account. It's all about when the computer actually processes it. The problem is exacerbated by the fact that many banks will record transactions for the next day if they're after 1pm or 2pm. So now there's a very large window of opportunity for your deposit to languish in processing-hell while the business owners transactions zip through, almost always on the same day.

Also, certain chraging tactics are designed to screw account holders (and reap bounced-check fees). For example, when you charge gas at a pay-at-the-pump, your card is pre-approved for $30 (or some other flat fee). Now, you may only charge $20 of that in real gas. But the extra $10 is reserved against your account until the merchant actually submits receipts, which can take a day or two. So now you're happily gallavanting around thinking that there's X amount of duckets in your checking account when in fact it's X-$10. If you happen to write a check in that little blind period and it hits your account before the gas recipt does, you can literally bounce a check when in fact your account balance will truly cover it. I know - it happened to me.

Please also keep in mind that anything I know is from fighting with banks about 8 years ago (and the explanations they gave me of how/why certain things happened), so some of these practices may have changed or be "unique" to only those banks I had to deal with. Or they could have just been flat-out song-and-dancing me. But the simple fact is I have bounced three checks in my life when in fact my account was clear for the funds - and all three track back to one of the two situations above.

But, in deference to your original sentiment, this has not been a problem for me since I got on top of my finances and no longer had to live hand-to-mouth. But for a lot of people who aren't as lucky as me, this is a huge problem that not many of them are aware of until it's too late.

Peace.

Mostly.

[VelmaD]

18. I always like what my best friend's bank does to her...

if she has a bunch of checks come in at once they process the larger one first then the little ones no matter what date order they were actually written in. That way if she's overdrawn they can hit her with multiple overdraft fees for every little check that doesn't clear instead of just once for the one big one even if it was written last.

[MostlyLurks]

21. Hadn't Heard of That, But it Makes (Evil) Sense n/t

[killbotfactory]

22. That's what my bank does to me! BankOne sucks.

It's cost me over 200 dollars last month.

sonsofbitches.

I'm switching banks.

[foo_bar]

35. sounds like Fleet

[misterphelps]

45. They all do that

Is your's different? Very common ploy to increase fees that I must have seen 4-5 years ago on 60 minutes.

[petepillow]

36. Oh Gee! Gosh! Why it's so simple!

Now why didn't anyone else think of that? You know, the amount of money the banks will steal from people who will need time to adjust is only what those poor bastards deserve for not keeping a perfectly balanced checkbook!

If only they were as smart as you, my friend. Then they'd have already forseen this largely unpublicized change in bank policy from that they've known their entire lives.

Those stupid idiots who are forced to live check to check deserve one less option to scrape by, don't you think?

One can only hope that the banks get as much as they can from these unbalanced saps in OD fees before the saps get their act in gear and figure out how to always have the exact amount in their account before the instant deduction that they've never had to deal with before.

Sorry. Layin on the sarcasm kinda thick here, just so's ya know. Maybe it's simple to some people, but a lot of poor people are gonna get raped by this. Rule #1 of the banking industry: THE BANKS ALWAYS WIN. Kinda like casinos, yes?

[SoCalDem]

14. I'm sure you all know already, that they process checks BEFORE deposits

Lots of young folks don't realize this and get slammed with overdraft charges..

My son got caught in this mess a few years back..

He had about $50 in his account. Wrote some checks for bills, and deposited his paycheck in the ATM (like he always did).. Apparently two of the checks and the deposit were processed at the same time.. They bounced BOTH checks, charging him $21.00 per check, and THEN credited his paycheck for almost a thousand bucks..

It was perfectly legal...rotten, but legal..

[prayin4rain]

23. That is fine. But why can't they handle the checks you deposit the same

way? That is what is annoying to me. It has taken my payroll check 5 days to clear before, and even before this Check 21 it never took the checks I write as long to clear.

[Skittles]

25. I get the photocopies of my checks

they are all on a page or two, so tiny I'd need a magnifying glass to actually read them

[donco6]

26. If you want to avoid overdrafts, you have to move to

direct deposit, if you're not already on it. If you wait to deposit your check, and write checks for payments on the same day, you're going to be overdrawn. DD hits your account early and is credited on your payday. (At least, that's how we do it in my payroll dept.)

[FlaGranny]

34. True, and easy to suggest,

but many employers do not offer direct deposit. I understand it costs the employer more to do it.

[donco6]

39. Interesting. Ours is cheaper.

Maybe you have to have so many employees . . . ? Oh well.

[FlaGranny]

41. I think so - probably has to do with volume.

My husband has a small business (no employees) and I know he has to pay full price for any service.

[Blue_Tires]

29. i learned the bank's 'rules' 8 years ago

when they cased a couple of (postdated) checks, and i got in a spot of trouble...postdating means nothing now

[Patiod]

30. I learned all this from Michael Moore's "TV Nation"

They used a local Philadelphia bank as the example of how these policies maximize the change of being able to charge $40 overdraft fees - processing checks in decreasing order of size, processing checks before deposits, etc.

[FlaGranny]

37. As I said above,

I have had the same bank now for many years. They will and have covered checks for me. It so happens that twice the bank made errors. Once a deposit I made didn't get credited and another time they erroneously put a freeze on my account. Both times they covered checks but charged fees. Of course, they bounced other checks for which the creditor AND the bank charged fees. On both occasions, I called, they corrected the errors, removed the bank charges and wrote letters to my creditors, who also removed the charges. Anyway, if you have a good record with your bank, they will, at least some of them, cover a check or two, but still hit you with charges.

Back in the 1950's my parents' bank would call them on the phone if there was any problem. Overdraft charges were rare in those days. That was when banks were local and knew their customers - no corporations involved. Sometimes the good old days really were better.

[justjones]

43. Great. I'm already raped by Wamu each month, now they can sodomize me.....

I wish I could function by keeping my money under my mattress...it would basically be cheaper and safer.

BASTARDS!!!!

[misterphelps]

44. I'm sure they'll credit my deposits same day....NOT!

Absolutely another screwing. A windfall in the way of fees to one of the repuglicans largest contributing groups.

[Berserker]

47. I used to own

a retail business and found that banks give checks to anyone that wants to open and account. I got many many returned checks that I could not collect on. They give people check books and make the small business owner eat the bad checks. That has always pissed me off. I still have a pile of worthless checks. The way I see this new law is the business owner can collect the funds the instant he or she gets the check. This way the business owner is protected.

[Child_Of_Isis]

49. I say we boycott banks.

And buy money orders for our bills. I have actually thought of doing this, but it is less convenient. If my bank starts bouncing, I'll close it out.

[rednek_Liberal]

50. not to mention more expensive...

don't get how a gas station can sell a money order for .69 but Bank of America charges 5 bucks..

[Psephos]

54. Try a credit union

You can avoid a lot of the problems of dealing with banks by switching to a credit union, especially one of the smaller credit unions.

[Norquist Nemesis]

55. This has been coming for quite a while

It's a move toward a paperless society. Even now, when I write a check at one of my local groceries, they enter the info and get electronic acceptance then hand me back my check. At another grocery, it's either cash or debit card.

I can pay bills on-line and if the vendor accepts electronic funds transfer, it clears the same day the 'check' is to be paid.

It's a pain in the ass, really. Before, I could write a check on Wednesday, they deposit in their bank and knowing that the direct deposit on Friday would cover it, no late fees or penalties because I paid on time.

Not any more.

[Trillo]

57. Going Paperless

If we're going to transition to a paperless and completely electronic currency, then why doesn't my ATM card have an embedded dbase or spreadsheet, with the credits located on the card itself? (To be 'transferred' from my card to the merchant upon purchase) Even short of this concept is that the ATM card could record credits and debits and so act as a record and 'proof' for the unfortunate occurrence of an error of some kind.

Shouldn't the person who's responsible for 'earning' the money have some kind of control over it?

It seems to me that the way this whole paperless society is being set-up, the average person, consumer, businessperson, etc., is having control of their money being taken completely away from them. Is responsibility for earning the money going to also be assumed by the new 'e-money controllers'?

Control and responsibility are supposed to go hand in hand. Isn't that one of the prime criticisms of the * administration? That there's too much executive power and control and too little constitutional responsibility?

[jmowreader]

59. This is what we do...

We set up a lot of automatic deductions. Our mortgage (we have the taxes & insurance built into our house payment), car insurance and utilities are all handled that way, and we paid cash for our cars so there's no car payments. You get a statement from the company saying how much they took out. Hence, we don't mail checks. (There is a company called CheckFree that will set this up for any company--they use the national electronic funds transfer system to move money from your account to a creditor's. This isn't what we use, since all our creditors have their own EFT systems, but apparently it's pretty good.)

The trick is that all of that is deducted on Wednesday, and we get paid on Friday. Our phone bill is stable, our light bill is fairly stable and we have an antenna for the little television we watch so no cable bill.

We use either debit-card transactions or cash for shopping, so no checks there.

[WatchWhatISay]

60. 15 minutes

On Wednesday I filled up my tank at the corner store. When I got home I went online to check my account. I was surprised to see that the purchase I had just made, less than 15 minutes earlier, had already cleared my account.