Wednesday, September 22, 2004

Beware: No more timing your check-writing with your direct deposit!

One of the biggest complaints about the new plan is the fact that with Check 21, the length of time between when a check is written and when the amount is debited from the account – the "float" – will lessen. Consumers, then, will likely bounce more checks as the processing gets quicker.

The nonprofit group Consumers Union predicts that under the new system 7 million more checks per month will bounce than do now. Supporters of Check 21 dispute that number, however.

"Don't write a check unless the funds are already in your account," advises Consumers Union. "The checks you write will clear faster, but banks aren't required to speed up the time when they make funds available from the checks that you deposit."


KipEsquire said...

One aspect of this transition not mentioned (of course) in the article is that, by reducing the threat of bounced checks, more merchants will be willing to accept them.

I've even seen some banks and stores that have electronic check readers essentially similar to credit card readers. You write out the check, it's swiped through and the magnetic ink is read and the amount is debited real time, just like a debit card linked to your checking account.

With such a reader a store could accept personal checks with no danger of bouncing.

But somehow this is a bad thing for consumers?

STCA said...

I agree; the other point is that it will make your deposits clear theory. Banks are banking on NSF fees, so they will only apply the quick clearance to taking your money, not giving it to you.

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