Claim: After the implementation of “Check 21” on
Status: Multiple — see below.
Example: [Collected on the Internet, 2004]
“Check 21” starting in late October
You’ve probably bought something in a store with a check even though you don’t have the money in your account at the time. You figure you have a few days for the check to clear, and by then the money will be there. It’s called the “float.” Well, the float is slowly becoming a thing of the past. Because of a new law going into effect in October, money will be drafted from your account immediately when you write a check. It’s called
What are the main effects of “Check 21” on consumers?
You won’t be able to get your original paper checks back, because your bank will no longer have them.
Checks you write will clear sooner, increasing the risk that a check will bounce if funds are not in the account when you write the check. Don’t write a check unless the funds are already in the account to cover it.
You may not get access to the funds from checks you deposit any sooner, because the new law does not shorten check hold times. After
Banks will save money on processing checks, but banks are not required to share these savings with consumers.
Different kinds of copies of a check will have different rights attached.
A bank other than your bank will have your original check, and will decide whether to destroy it. Neither
Consumers will get new rights for some electronically processed checks, but not for others. When a so-called “substitute check” is provided to a consumer,
Consumers who want to maximize their consumer rights should ask for return of “substitute checks” with their checking account statements. Watch out for fees associated with a substitute check-returning account. Look for another bank if your bank charges a high fee to get copies of all your checks as substitute checks.
Only the special “substitute check” can be legally equivalent to the original check to prove payment. The copies that a bank sends to consumers under a
When do these changes go into effect?
Check 21 becomes effective October 28, 2004.
Origins: On 28 October 2004, the provisions of the Check Clearing for the
Of course, one result of faster check processing will be a much shorter gap between the time consumers issue checks for payment and the time the covering funds are withdrawn from their accounts (usually referred to as the “float” time). After
Another provision of
|Frequently Asked Questions About “Check 21” (Federal Reserve Board)|
|Questions and Answers About “Check 21” (Consumers Union)|
Last updated: 28 October 2004