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"Check 21" Is HereOn October 28, 2004, the "Check Clearing for the 21st Century Act," (known as the "Check 21" law) went into effect. A federal law, it applies across the United States.The Act speeds up the banking process by authorizing electronically the transfer, clear-ing and debiting of checks you issue for utility bills, credit card accounts, household expenses, etc. "Check 21" will also alter the handling of your monthly statement. Some consumer advocates have criticized the law as unfriendly to consumers. A major change will be the loss of "float," the 2-5 day window between the time a check is written and the withdrawal occurs from the account (much of this time in transporting paper checks between banks by ground or air). "Check 21" will sink the "float." We recommend two answers: first, write checks only to the extent of your current checking balance; second, for added protection, consider a "check credit" or other "bounce protection" arrangement. The fee on such an account, if paid promptly, will usually be a saving over the $25-535 cost for each bounced check. Balancing your checking account regularly is still important. You need to keep track of which checks have cleared to know your working balance. But it will be different: no more return of your paper checks. According to the American Bankers Association, 18 to 35 percent of Americans have gotten their original checks back by mail. For those aged 55 or more, it is 50%. But no more! Over a period of time, banks will convert to a system providing check images or "substitute checks" (front and back) with your statement. This will take some getting used to. Some will find it easiest to track their banking online. Viewing your account or even paying bills online may be provided by your bank. But check to see whether they do it free or with a charge. Will your deposits get the same quick treatment and crediting? The new law doesn't require this "equal treatment." But you can speed up crediting deposits if you sign up for direct deposit with your employer, Social Security, or your pension sources. When in doubt, check with your banker. They will want to keep you as a customer. |
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