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October 26, 2004 8:27 AM   Subscribe

Your Check Won't Float As of Thursday, October 28, "floating" checks will become a thing of the past. Be forewarned or stand by for major insufficient funds fees on your accounts. More info inside.
posted by Pressed Rat (71 comments total)

 
Summary: As of 28 Oct 04 it will no longer be possible to float a check. A new law goes into effect on 28 Oct 04 and all checks will be cleared electronically within minutes... even at night, even on weekends. If payday is Monday and you write a check on Saturday assuming it won't clear before your paycheck is posted, you will be wrong ---- that check will bounce. And your financial institution will most probably charge you overdraft fees. Be aware of what you are doing and the affect it could have on your credit rating or career. Make sure funds are available before you write a check. Additional detail may be found at:

< http://www.consumersunion.org/finance/ckclear1002.htm>

[< http://www.federalreserve.gov/paymentsystems/truncation/default.htm>>

Check 21 is a change in banking law regarding check processing by financial institutions. You should follow-up with your personal financial institutions for specific questions about how your checks will be handled, and whether there are implications to your person accounts.


Detailed Article: "Check 21" starting in late October 2004
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 "Check 21," and it allows retailers to scan your check through a machine that deducts the cash within minutes. It's essentially the end of the paper check system, the check will eventually be destroyed. There will be an image of the check online and that will serve as proof if you need it.

What about checks that you deposit? Well, the float is no longer available to you, the customer. But the bank still will hold a deposit for a few days to make sure it clears. It's not fair, but it's the way it's happening.

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 30
months, there must be a study on whether banks are making funds available to consumers earlier than the allowable hold periods.

--· Different kinds of copies of a check will have different rights attached. Check 21 creates a new kind of paper copy of an electronic image
of a check. This special kind of copy is called a "substitute check." Only a substitute check can be the legal equivalent of the original check, and only a substitute check triggers your right to re-credit of disputed funds. A regular copy of a check does not carry these same protections. If you ask for a copy of a check, your bank may send you an ordinary copy instead of this special kind of copy which triggers legal rights and protections unless you ask for a substitute check.

-- A bank other than your bank will have your original check, and will decide whether to destroy it. Neither Check 21 nor other law requires a bank
to keep your original check for any period of time. Before Check 21, your own bank decided how long to keep your original checks, if you didn't get them returned with your statement. Under Check 21, the bank of the person you wrote the check to may decide when to destroy your check.

-- 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, Check 21 gives the consumer a right to have funds of up to $2,500 re-credit to the consumer's account in 10 business days if the check is paid twice, paid for the wrong amount, or otherwise paid in error. The statute is ambiguous about whether this new right applies when a paper substitute check is used in the processing of the check but is not returned to the consumer. The regulations restrict the right of re-credit only to checks where the consumer was provided with a substitute check. If a check is processed electronically by all the banks it is routed through without the use of a substitute check and the consumer is not provided with a substitute check, then the check remains under state check law. In that case, the consumer does not receive a 10 day right of re-credit even if the electronic image of the check is paid twice, paid for the wrong amount, or if both the electronic image and the paper check are paid.

-- 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 so-called "voluntary truncation" agreement, where the consumer agrees not to get the checks back, do not prove that a payment has been
made, and do not trigger your Check 21 re-credit right.
When do these changes go into effect?
Check 21 becomes effective October 28, 2004.


posted by Pressed Rat at 8:29 AM on October 26, 2004


Are there any good side effects to this? Or is this purely a corporation-backed law?
posted by graventy at 8:35 AM on October 26, 2004


thanx for the heads up pressed rat. i had no idea this was about to happen.
posted by Stynxno at 8:39 AM on October 26, 2004


graventy: well, in theory, when you deposit those out-of-state checks that banks used to hold for ten days, they should go through more quickly. That's the only consumer upside I see.
posted by headspace at 8:43 AM on October 26, 2004


In advance, sorry for the screwed up inside post - it didn't show up in preview and I'm no html wunderkind.

I'm not sure what, if any, "good side effects" accrue, other than to the bottom line of the banks - witness your deposits not similarly taking effect nearly instantaneously. The inside post came from my brother via the Air Force banking Officer at the Pentagon, BTW.

I'd expect this to play hob with a lot of folks' accounts - it may pay you to get insufficient funds protection for your checking account through your bank.
posted by Pressed Rat at 8:45 AM on October 26, 2004


graventy, the good side effect is that it will become a little bit harder to screw your accounting up, since the balance you'll get from the ATM will more quickly resemble the balance you think you ought to have.

Now, if only they could pass a law requiring the recipient of a check to cash it within 24 hours...
posted by Mars Saxman at 8:47 AM on October 26, 2004


What about checks that you deposit? Well, the float is no longer available to you, the customer. But the bank still will hold a deposit for a few days to make sure it clears. It's not fair, but it's the way it's happening.

Considering the nasty fees that happen when a check bounces, it only seems right that there should be more accountability on the part of the banks. If they're all going to process checks this quickly, doesn't it follow that they could process deposited checks just as quickly? This should at least be true for all checks written on U.S. accounts.
posted by whatnot at 8:51 AM on October 26, 2004


The banks apparently are giddy over this new law, as it makes certain they will net millions of dollars profit in overdraft fees.
posted by naxosaxur at 8:52 AM on October 26, 2004


Say this happened in England:

substitute £Sterling for dollars and change the other relevant details. Would you want to see this on the Mefi front page?
PS: I saw this on BBC News24 2 days ago.
posted by dash_slot- at 8:54 AM on October 26, 2004


Meta.
posted by dash_slot- at 9:00 AM on October 26, 2004


People have been emailing this for a while,
it's on snopes too.
posted by milovoo at 9:00 AM on October 26, 2004


Thanks Pressed Rat, This is info I need to know.
Help me here. (I can read stuff, but unless I hear it I dont seem to understant)

If I as a business man buy supplies "on credit" meaning I don't get paid until I complete the job. Sorry, let me try to explain,...I "float" the check I pay the supply house until I get paid from the customer. Is that clear?...I'm not clear myself.
posted by Cedric at 9:13 AM on October 26, 2004


Thanks! I'd noticed recently that the floating time was down to 1&1/2 to two days max lately in the States.
posted by Shane at 9:13 AM on October 26, 2004


If they're all going to process checks this quickly, doesn't it follow that they could process deposited checks just as quickly?

The snopes writeup milovoo linked to explains this pretty well. Since not all financial institutions are going to participate in truncation, a lot of checks are going to continue to be processed like they are now.

Also, the laws that control the length of time banks can hold funds from your deposits won't be changed by Check 21. A provision of the law requires the Federal Reserve to review the check hold laws within thirty months of the effective date, but since the law offers pretty weak protection against fraud as it is, don't expect big changes anytime soon.
posted by Hlewagast at 9:18 AM on October 26, 2004


I haven't bounced a check in years thanks to overdraft protection... besically a line of credit with my bank that can only be used to cover my checking account in times of emptiness (it doesn't just cover checks, I can pull cash against it if I need to). I *highly* recommend it.

Then again, the only check I write each month is for rent -- all other payments are now electronic.
posted by o2b at 9:20 AM on October 26, 2004


If they're all going to process checks this quickly, doesn't it follow that they could process deposited checks just as quickly?

Someone at my EX-bank explained to me that the bank very purposely processes all the day's debits BEFORE processing credits, thus increasing the chance of being able to charge a late fee. This would be Sky Bank in Ohio.

When Sky took over Great Lakes Bank they lost literally dozens of customers due to their aggressive fee-charging tactics, including an ATM that records debits late, almost always showing a higher balance than actual.
posted by Shane at 10:18 AM on October 26, 2004


Is it common for people to still use checks/cheques in the US or are they on the way out as 02b's comment may suggest? I'm pretty sure I haven't written one in over a year, and have received maybe one or two in that period. What do Americans use them for?
posted by biffa at 10:19 AM on October 26, 2004


By the way, Ohio driver's licenses have a magnetic strip, and sometimes when I write a check the store scans the strip on my DL. What the hell is up with that?
posted by Shane at 10:22 AM on October 26, 2004


Is it common for people to still use checks/cheques in the US or are they on the way out as 02b's comment may suggest? I'm pretty sure I haven't written one in over a year, and have received maybe one or two in that period. What do Americans use them for?

Frankly (and quite appropriate to this topic), I only use checks once or twice a year when my cash is tight and I want to float a check. Alas, no more.
posted by Shane at 10:26 AM on October 26, 2004


Believe it of not, lots of people (mainly older) in the US still use checks, and they probably all do it for two reasons: the float, and the fact that it feels more tangible to them. I dread going to the grocery store because I know somebody's gonna whip out their checkbook and take forever to write it while they're in front of me in line.

Screw the old check system. I want my money debited at the moment the transaction happens. I want my money deposited at the moment the transaction happens. With direct deposit and debit cards, this is now possible. I'm glad this new law will be passed, as it will lend more immediacy to financial transactions. This past year I had to float a check to the IRS because (surprise!) my paycheck hadn't gone through yet. Now, I'd be assured that the money in my paycheck was available the next day and I could just tell the IRS to electronically debit my checking account.
posted by zsazsa at 10:34 AM on October 26, 2004


What do Americans use them for?
for rent, for utilities, for credit card payments, etc...Most of us aren't doing it online or by EFT yet. I haven't seen anyone write a check in a store tho, in ages and ages.

This is a gigantic windfall for banks, and sucks for us, as usual.
posted by amberglow at 10:40 AM on October 26, 2004


Since writing a check when you don't have the funds in your account to cover it has been illegal for years, this shouldn't affect anyone.
posted by kindall at 11:30 AM on October 26, 2004


This is a gigantic windfall for banks, and sucks for us, as usual.

Check floating was never a designed "feature" of the banking system -- it was a byproduct of the amount of time that it took for banks to physically exchange and process checks. Technology has made it possible to reduce that amount of time.

Negotiable instruments are "drawn" on an account. They are not, and were never intended to be, "drawn" on nothing (that's called credit). I don't see what's so "anti-consumer" about preventing something that was never intended in the first place.

(on preview: what kindall said, only longer)
posted by pardonyou? at 11:35 AM on October 26, 2004


What about checks that you deposit? Well, the float is no longer available to you, the customer. But the bank still will hold a deposit for a few days to make sure it clears. It's not fair, but it's the way it's happening.

This is the bit that makes me livid. Banks deliberately withhold money after they know it's cleared in order to bilk the customer and there's nothing we can do about it. I've had a bank deposit only a third of an electronic transfer holding the rest to "be sure it cleared". The source - one of their affiliate's investment accounts. There is no way there was any doubt the amount would clear, they just wanted to steal from me.

Banks policies are nothing but theft.
posted by Karmakaze at 11:52 AM on October 26, 2004


If Check 21 starts Thursday, does the bouncing start Friday?--
To suggest that many bank customers are unhappy with a new law known as Check 21 is like saying that Yankees fans are a bit peevish about the outcome of the American League playoffs. ...

But the change won't affect the length of time banks are allowed to hold deposits, which is covered under a different law. Consequently, the checks you write to pay your bills could clear while there's still a hold on your paycheck, triggering overdraft charges.


So banks can still take a week or longer to clear a check we deposit, but we customers no longer have a day or two? That's not right. Why not make them do something about speeding up the clearing of our deposits? What do we get out of this, besides fees and overdraft charges? (and on preview, what Karma said)
posted by amberglow at 12:02 PM on October 26, 2004


Since writing a check when you don't have the funds in your account to cover it has been illegal for years, this shouldn't affect anyone.

Right, only the ones who deserve it, like those living paycheck to paycheck? If this had taken place while my husband was in grad school, we may have gone without groceries for the last few days every month. But that was our fault for pursuing higher education.

Screw the working poor. Make them pay the penalties so the rest of us can have low- or no-fee accounts. seems fair.

btw, the banks will sometimes refund overage fees if you ask nicely. It helps if you carry a toddler on your hip, have a hacking cough and look like you haven't slept for a few days.
posted by whatnot at 12:02 PM on October 26, 2004


As I said, it's been illegal for years, so you shouldn't have been doing it to begin with. Don't be a criminal, and you won't have any problems.
posted by kindall at 12:06 PM on October 26, 2004


Don't pass wrong-headed laws, and people won't be criminals.
posted by sonofsamiam at 12:19 PM on October 26, 2004


There is a story about this in this weeks Economist you can read it here but it'll cost ya 2.95. Apparently in the US cheques are still very popular and after 9/11 when flights were shut down banks couldn't process any cheques at all. As for benefits well it will stop you from pretending you have enough money to pay for something and it's a lot more energy efficient to whizz electrons around than it is to fly tons of paper all over the country.
posted by zeoslap at 12:34 PM on October 26, 2004


Don't give a dance if you can't pay the band or what kindall said.

Screw the working poor.

"Poor" does not equate irresponsibility. Don't spend if you ain't got it. And if you ain't got it, then you eat a lot more rice & beans at the end of the month (aprox. $1 for 1lb of rice and $2 for 2lbs of pinto beans). I'm not feeling sorry for poor grad students.
posted by Juicylicious at 12:34 PM on October 26, 2004


Screw the working poor. Make them pay the penalties so the rest of us can have low- or no-fee accounts.

I would have wasted a lot less money in penalties back when I was "working poor" if my bank account balance statements hadn't taken so long to catch up with reality. This change is a good thing for people who really care whether the money is there or not.
posted by Mars Saxman at 12:54 PM on October 26, 2004


It's not poor grad students, but millions of poorer and working class people who have already deposited their paychecks, but can't access their money--something this law does nothing to fix at all. And pushing them out of the banking system entirely will be one sad result of this as well--checkcashing places charge even more than banks.
posted by amberglow at 12:58 PM on October 26, 2004


kindall: is it criminal for me to deposit a check, wait two days and then write a draft on those funds?

This isn't an issue for me right now, as I generally am pretty good at planning in advance and have the funds to do so.

It's hard not to think this should have come with better guarantees for depositors.
posted by weston at 1:14 PM on October 26, 2004


Don't be a criminal, and you won't have any problems.

"What is the robbing of a bank compared to the founding of a bank?" - Bertold Brecht
posted by quonsar at 1:24 PM on October 26, 2004


The true working poor don't - and sometimes just won't - use banks. The middle class uses banks. (Note, I'm probably "middle class", whatever the hell that means. I ate beans and rice two nights this week for financial reasons. Whatever.)

Other than cashing personal checks written to me for services or gifts, I haven't used a proper bank in years.

I go to a check cashing place that seems to be pretty scrupulous, friendly, and fair. They don't push payday loans or check-into-cash loans and other financial tools to hoist yourself by your own petard. The percentage rates they take off of validated payroll checks are quite slim, and in the long run I lose a lot less money doing it this way then I would using a bank due to ATM fees, bank service fees, overdraft fees, overdraft protection fees and more.

I always know how much money I have. I can't overspend. I'm not screwed if I can't find an ATM. But I am if I leave it at home, which I will do sometimes if it is an inordinate amount of cash.

True, I could physically lose all or some of the cash. In fire, in theft, in just careless loss. That's happened maybe three times in my life. It happened to my girlfriend and I a few months ago, when we had her wallet fall out and get lost while biking to work together. We survived. A month ago, I found a hundred dollar bill on the ground, which is about half what we lost previously. It comes and goes.

One could also "lose it all" while it was in a bank in a number of well known ways, or in new ways currently being invented.
posted by loquacious at 1:25 PM on October 26, 2004


amberglow: direct deposit?
posted by reverendX at 1:33 PM on October 26, 2004


It's not poor grad students, but millions of poorer and working class people who have already deposited their paychecks, but can't access their money--something this law does nothing to fix at all.

Point well taken.

I have noticed that Wells Fargo has just begun holding checks that I deposit for several days before the funds are available. I thought it was because one of my tenants, who did exactly what this new reg is supposed to address (wrote checks b/f the $ was in the acct) gave me a check that bounced. I figured I was being punished, but maybe it has more to do with the new reg. Although that doesn't make any sense becuase I have one of those accts where I have free overdraft protection. Hmmm. Anyway, still not feeling sorry for grad students that don't plan.
posted by Juicylicious at 1:41 PM on October 26, 2004


Check kiting has always been illegal. No big deal. But note that all "float" does not dissapear here. There is still time in transit for any bills you mail out (anyone still do that?). As far as problems with held deposits, do what I do: I choose to stay away from the mega-merger type banks and I deal with a local bank where the people know me as more than a number. I've never had a hold put on a deposit (funds available for withdrawal immediately) and, yes, there have been many times when I had very little in my account to "cover" the check I was depositing. No problems. That's what I get for banking with the same independent bank for over 20 years.
posted by AstroGuy at 1:43 PM on October 26, 2004


As I said, it's been illegal for years, so you shouldn't have been doing it to begin with. Don't be a criminal, and you won't have any problems.

"Poor" does not equate irresponsibility. Don't spend if you ain't got it.


kindall and Juicylicious, have either of you ever been so poor as to have to float a check till payday or even steal food in order to eat? Or just go a day or two without any food at all? If not, I hope you experience this for at least a short, short time. Maybe it will instill some empathy for the plight of the poor in you.
posted by Shane at 2:06 PM on October 26, 2004


Disclosure: I work at a small-ish financial institution that has been preparing for Check 21 for months. I've heard a lot of these concerns before, and I'd like to try to explain a few things.

...deliberately withhold money after they know it's cleared...
...banks can still take a week or longer to clear a check we deposit...


It's not as though your bank ever knows a check you deposited has cleared the account it's drawn from. Funds holds are placed with the idea that funds will still be held if the deposited check is returned to them unpaid. The length of time it takes for a check to be returned to the bank of first deposit can vary anywhere from three days to three weeks, so banks typically place the longest applicable funds hold as regulated under a 1987 law. More often than not, though, checks get returned after deposit holds have been released.

Why not make them do something about speeding up the clearing of our deposits?

I would say this might happen eventually, but not for at least a few years. Banks take huge losses due to check fraud, and placing holds on deposits is their best defense. Now that processing time will be shortened, these holds will be more effective, so they won't want to give them up or shorten them until the law forces them to. As I linked above, the law is going to be changed within the next few years, so write your congressperson and contact your state's office of consumer protection.

On preview, what AstroGuy said.
posted by Hlewagast at 2:07 PM on October 26, 2004


Maybe it will instill some empathy for the plight of the poor in you.

Oops, badly worded sentence: If there are "poor [people] in you", then obviously you've been eating the poor when you should just Eat The Rich.
posted by Shane at 2:10 PM on October 26, 2004


Maybe it will instill some empathy for the plight of the poor in you.

Well thank for that presumptuous and patronizing post. Take a look at Amberglow's post and my response.
posted by Juicylicious at 2:58 PM on October 26, 2004


Maybe I'm being dense, but doesn't this make check fraud even easier? Not for the average middle class joe trying to fudge the time period between the paycheck and the rent payment, but for the actual criminal who got ahold of the joe's checkbook, and has no intention of even trying to cover the check amount. Immediate processing means the bank didn't look to see if there was a hold on that account, right?

And as for you guys advocating online or automatic payments, personally I stay as far away from that sort of thing as I can. Basically, you are giving control of your personal finances to your electric company, cable company, or bank. You no longer get to decide your financial priorities. They get first call on your checking account. Doesn't matter if you have an emergency that month and need cash in a hurry. You'll just have to find another way to pay for you dying mother's operation cause 24 hour fitness needed your monthly dues NOW!
posted by MetalDog at 3:37 PM on October 26, 2004


The banks not only process debits first, they process debits in size order from largest to smallest, to maximize the overdraft penalties.
If you have $100 in your account, and you write 9 checks for $10 and 1 check for $100, you will bounce 9 checks rather than one, because they process the largest one first.
This just adds to the frustration when the consumer derives no benefit from the technology used to speed things up.
I don't have a cite, but I believe the banks make much more money from penalty fees than they lose to check fraud.
posted by bashos_frog at 3:44 PM on October 26, 2004


kindall and Juicylicious, have either of you ever been so poor as to have to float a check till payday or even steal food in order to eat? Or just go a day or two without any food at all? If not, I hope you experience this for at least a short, short time. Maybe it will instill some empathy for the plight of the poor in you.

Let me tell you about the day when I had nothing in the house to eat, 35 cents in my checking account, and my check for a job I'd recently completed was a couple days away. Credit cards were maxed (all thirteen of them, for a grand total of $52,000). And out of the blue, a blessed coupon for a free pint of Haagen-Dazs ice cream arrived in the mail. That was dinner.

The next day, the check I was expecting arrived early. Whew! But it was too close for comfort.

It sucked mightily, I agree. It could have sucked worse, of course, and I'm aware that I got lucky. But I had a glimpse of what my life could be like if I didn't make some changes.

It's one of those things that happens enough that it only happens to you once, because after it happens to you once, you do everything in your power to make sure it never ever happens again. And lo, it never did. Funny how that works out. It required major changes in my life to correct the mistakes I'd made, and I'm still paying for some of them (credit ratings recover very slowly), but I made them because I knew my life was teetering on the brink.

I had to learn my lesson the hard way. But others don't have to. If your lifestyle, however modest, requires that you take advantage of float, you are living beyond your means. Checks are cash. Anyone you give a check to could, in theory, go to your bank and cash it an hour after you write it. If you bet otherwise, you will lose, and it will suck.
posted by kindall at 3:46 PM on October 26, 2004


And as for you guys advocating online or automatic payments, personally I stay as far away from that sort of thing as I can. Basically, you are giving control of your personal finances to your electric company, cable company, or bank. You no longer get to decide your financial priorities.

Actually, our credit union gives us the option to enter the amounts every month, rather than just having them automatically deducted. So you still have control of your money. Right now I only have to write checks for daycare and the occasional school-fundraiser-type thing. I look forward to ditching them altogether.
posted by whatnot at 3:58 PM on October 26, 2004


kindall, i get what you're saying, and i agree to an extent: if you're floating checks on a regular basis, you need to reexamine your behavior and priorities.

however, i think you're not recognizing the fact that for many americans of modest means, there comes a time -- maybe it's only twice a year, but still -- when you needto float a check. maybe you've been living on a strict budget and there were some unexpected expenses. maybe there was a problem with payroll at your job and your direct deposit didn't go through on the day it was supposed to, the day you'd planned on having your money.

for many of us, that little "fudge" period has proved life-saving (or, at least credit rating-saving...same thing in america): it's not that we relied on it, but it sure has come in handy.

i'm gonna reserve judgement on this check 21 thing. i think bank managers and stockholders are jizzing themselves in delight over the windfall in penalty fees they're going to see, but on the other hand, i think it will cut down on fraud and force some people to live more responsibly.

but, as someone who is not quite as financially secure as he would like to be, i am apprehensive about the loss of floating and what it means for me when there's an unforeseen event in my life.
posted by lord_wolf at 3:59 PM on October 26, 2004


What lord_wolf said.

And this is my response as well to the direct deposit thing mentioned above--...maybe there was a problem with payroll at your job and your direct deposit didn't go through on the day it was supposed to, the day you'd planned on having your money. (direct deposit is not perfect, and many people i know have stopped using it, preferring to have the check in hand, rather than a receipt that may or may not have been deposited the day it was supposed to be. This also is a big problem around the holidays for many many people.)
posted by amberglow at 4:25 PM on October 26, 2004


SO they can still keep their policies of "deposits will take 3-5 days to credit" yet if I write a check during this period suddenly I'm the bad guy?

Oh please, this is a big handout to the bankers. All they did was legislate a way to make credits take longer while making debits instantaneous.

If the banks think they'll get some massive windfall they might be in for a surprise when everyone shifts to credit cards and people write one check a month - to their credit card. Which is probably not issued from their bank.

We need to pass a law that can limit what congress can do, and toss in a fucking people's veto, because I can smell the rotting shit from DC all the way here in Chicago.
posted by skallas at 4:38 PM on October 26, 2004


Of course the bank's defense is going to be, "Well, we have to wait on those checks, they might be bad!" Hey, how about the ability to transfer funds just by connecting two debit cards? Or a free paypal-like service from your bank so we can all do without these silly pieces of paper. Oh right, there goes all that precious punitive fee money.
posted by skallas at 4:41 PM on October 26, 2004


I had to learn my lesson the hard way. But others don't have to. If your lifestyle, however modest, requires that you take advantage of float, you are living beyond your means.

kindall: Why not tell that to President Bush?
posted by ed at 4:51 PM on October 26, 2004


I don't think Bush is going to listen to lil ol' me.
posted by kindall at 5:32 PM on October 26, 2004


I'm not a stupid person, but I do not understand how this should not speed credits to the same degree.

Example:

I write a check to Wal-Mart. They scan my check with their cool machine that immediately deducts the funds from my account and transfers it to Wal-Mart. Wal-Mart does not have to wait on their money, right? And I'm $35.57 poorer by the time I get to the car.

I receive a check from someone, and take it to the bank. Why can the bank not scan the check with their cool machine, and have it immediately deduct the funds from the checkwriter's account and transfer it to mine?

It is the same thing. How can it be that when I am the debtor and Wal-Mart is the creditor, it is instant... but when I am the creditor and someone else is the debtor, it takes 3 days?

I'm somewhat embarrassed that I don't understand this, and I'm hoping it is only because I've not gotten quite enough sleep the last few nights, but to me I cannot understand how it doesn't work both ways.

Put another way... if the money is instantly debited in account A, what possible explanation could exist for it not to be instantly credited to account B?
posted by Ynoxas at 8:10 PM on October 26, 2004


When you write a check for money that's not in your account, but you cover it during the float, then you've borrowed that amount of money from someone for free for that length of time. Without their permission. You've stolen.

The fact that people are bending over backwards to justify this really surprises me. It's depressing.

I share frustration with holds on deposits and agree that there should be some consumer-friendly push to get deposits cleared as quickly as possible. But, frankly, that's a seperate issue than kiting checks. Kiting checks is illegal, it's been illegal for a long time. Kiting a check is writing a check for an amount that is not present in your account when you write the check. Period.

For a long time many fraudsters have used the check float to steal lots of money from banks—by using multiple banks and chaining the deposits and withdrawals between them, gradually escalating the amount that was being floated. Many of you that are justifying kiting checks have—c'mon, be honest—yourselves taken advantage of a float and, for example, cashed a personal check somewhere to make a deposit to cover an earlier bad check. I've never done that, but I know many people who have. It's all the same thing. It's using money that's not yours.

On Preview: "...how this should not speed credits..." It should. As you say, for all the checks that they electronically clear almost immediately, the bank where it was deposited knows that the check cleared, right? But, as mentioned, not all banks are going to be doing this and banks lose a lot of money from check fraud. Until they can be sure that almost all of the checks they're depositing are good, they're going to be forced to continue to be conservative on this.
posted by Ethereal Bligh at 8:17 PM on October 26, 2004


So then they should be conservative with the fees they impose too then.

When we write checks assuming the money will have cleared by the time they're deposited, we're just acting normally--it's not an attempt to take advantage or anything, nor are we crooks. It's sad that you guys don't see that.
posted by amberglow at 8:49 PM on October 26, 2004


Amberglow, how is that any different from borrowing money from somone without their permission and paying it back before they notice it? Answer: it's not. If the money isn't in your account when you write the check, you're borrowing the money from someone.

And, yes, I'm as poor, and have in the past been as poor, as anyone here. I'm living on charity right now, hopefully soon to get public assistance based upon disability. And, yes, I've written in the last year, especially, a few checks for food, because it was the only way I could eat, when I expected to be able to deposit some money within a couple of days. But my needs didn't make it right.

I'm perfectly willing to do "wrong" things when I deem it necessary to do so. But I don't lie to myself about the ethics of doing so.
posted by Ethereal Bligh at 9:23 PM on October 26, 2004


It's completely different from your example of borrowing money. We write a check in anticipation of our own deposited checks clearing in time. When you write a check, all you've done is make marks on paper--meaningless until you mail it or give it to someone.

If you put a check in the mail on Saturday night knowing there's no mail pickup til Monday am--and you're waiting for a check to clear (that you deposited last Monday, but it hasn't cleared as of Friday) you're not breaking any law, nor are you a crook. You're taking a chance, yes, but that's it. There's absolutely nothing unethical or wrong or illegal about it, and millions of us do it.
posted by amberglow at 9:30 PM on October 26, 2004


But that's not what we're talking about. We're talking about taking advantage of the float time due to processing of the check, not that it's in the mail if you mail it.

That's writing a check for a pizza delivery, or groceries, and then making a deposit to cover it before the check gets back to your bank. That's what we're talking about.

By the way, banks don't even bother looking at the dates of checks when they process them anymore. Used to be, the date you wrote on the check meant something and, I suppose, you might be held to that date in terms of whether the money was in your account at that time (I dunno, but maybe). Now, though, what matters is a) when the merchant gets the check (there should be money in your account at that time) and, at the very least, b) when the merchant's bank gets the check. When it finally shows up at your bank has effectively been what matters, but not legally. The bottom line is that when you write a check and pay for something, it's money. There should be money in your account for the amount of the check at the moment the person you've paid gets the check.

As for when it's in the mail: well, you can't have it both ways. If you expect someone to accept the date of the check and the postmark of the envelope to represent when you've "paid" them (and many people do, and some merchants will work on this basis), then you can't really expect that it's okay for you to not actually have the money at the same time the you expect them to consider themselves paid.
posted by Ethereal Bligh at 9:54 PM on October 26, 2004


If you put a check in the mail on Saturday night knowing there's no mail pickup til Monday am--and you're waiting for a check to clear (that you deposited last Monday, but it hasn't cleared as of Friday) you're not breaking any law, nor are you a crook.

As I said, I understand this behavior to be illegal. Writing a check on funds you don't have is considered fraud. Doesn't matter if you expect the funds by the time the check clears. Something could always happen. Money you don't have isn't money you can spend.
posted by kindall at 10:28 PM on October 26, 2004


Metafilter: Don't be a criminal, and you won't have any problems.
posted by sixdifferentways at 2:37 AM on October 27, 2004


I'd think if it was illegal it would have been mentioned in the many articles about this new law, and its effects. I'll have to see a cite proving it, please.
posted by amberglow at 4:55 AM on October 27, 2004


By the way, banks don't even bother looking at the dates of checks when they process them anymore.

Wrong on this point, EB. I recently had a check that I wrote (and dated) over six months ago returned after the recipient tried to deposit it. Six months from the date on the check it is void (or sooner if stated).

amberglow, I can't give you a cite and I have been puzzled by the lack of mention in ANY article also. But I also am sure of the illegality.
posted by DBAPaul at 7:22 AM on October 27, 2004


I had that six months thing happen too, except it was a check i deposited--it cleared, and they credited my account after a week, and then 2 weeks after that, took the cash back out. And mailed me the check back.

I don't believe it about the illegality--one of the articles would have had to mention it, and it's perhaps the most widely practised thing about checks (that, and postdating).
posted by amberglow at 8:02 AM on October 27, 2004


This has already been said in other ways, I just wanted to add

THIS IS BULLSHIT.

If you deposit a check, you still have to wait 3-5 days for it to clear. So this magical happy-dust technology only works in one fucking direction?

And think about this: I give someone a check, and they deposit it. They don't see that money for 3 days, but I get the amount deducted immediately. So for a couple of days, we're both out month.

I would just like to know what asshole proposed this bill, and what is his home address?
posted by Civil_Disobedient at 10:00 AM on October 27, 2004


We're both out money. Don't know why I typed 'month'.
posted by Civil_Disobedient at 10:01 AM on October 27, 2004


The word "months" appears in the post directly above yours. Peripheral vision is a mischevious pixie.
posted by PinkStainlessTail at 10:12 AM on October 27, 2004


Hmm. I was just told the thing about check dates by a former banker, who explained it authoritatively.

That's what I get for believing her...my mom.
posted by Ethereal Bligh at 10:45 AM on October 27, 2004


It only works in one direction so that the banks can make more money. Three days worth of billions of dollars of cheques equals a hefty amount of investment interest made, and account interest unpaid.
posted by five fresh fish at 12:27 PM on October 27, 2004


I think y'all are arguing about different things. Amberglow is talking (I think) about depositing a check, and then during the 3-5 days when that check is already deposited in your account, writing a check in the assumption that when *that* check clears, the deposited check will also have cleared.

Other people seem to be talking about *first* writing a check, then hoping to drum up money to deposit so that the check will clear.

One could, I suppose, argue that both are stealing, but I think the first scenario is actually more common and less "criminal" -- the money IS in your account when you write your check, the bank just hasn't credited it yet.
posted by occhiblu at 2:17 PM on October 27, 2004


oh, i thought they were talking about what i was, which is what you said. : >
posted by amberglow at 4:01 PM on October 27, 2004


Is it common for people to still use checks/cheques in the US

I vary rarely use them for my personal accounts, but I often use them for my business account.

If you deposit a check, you still have to wait 3-5 days for it to clear. So this magical happy-dust technology only works in one fucking direction?

I couldn't have said it better myself.
posted by dejah420 at 6:46 PM on October 27, 2004


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