GOODBYE TO “FLOATING” CHECKS ; HELLO TO THE “CHECK CLEARING FOR THE 21st CENTURY ACT”

October 1, 2004

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Once upon a time, you could present one of your checks for payment, knowing that it wouldn’t “hit your bank account” for several days, or even a week or two. Fugghettaboutit.

The U.S. banking system transports about 100 million checks per day. After Sept. 11, 2001, it became obvious that a new system was needed so that disruptions in air and ground transportation would not affect commerce.

Therefore, the Check Clearing for the 21st Century Act (or Check 21) was passed, and goes into effect Oct. 28, 2004.

You will no longer have a “float” time from presenting a check. When you present a check to a merchant that has Check 21 capability, they will likely just verify it and hand it back to you. The amount of the check will be deducted from your account immediately (assuming it is in your account!).

In other words, your check will act as a debit card. You may as well just use a debit card.

Also, banks won’t have to return your cancelled checks to you after Oct. 28. If you have relied on those for record-keeping purposes, you will need to change your ways. Small businesses may still use the paper checks for a while. But before too long, you will have to read about paper checks in the history books.