Check 21: new US legislation for personal checking

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Posted By: <b>bcornell</b><p>FYI-<br /><br />Check21 is a new piece of legislation going into effect on Thursday. There are a lot of Internet <a href="http://www.boston.com/business/articles/2004/10/26/what_the_change_will_mean/" target="_blank">explanations</a> about what it entails. The gist for collectors is that all personal checks will now all clear electronically, which means that relying on "float" (i.e., writing checks w/o covering funds) will be a very bad idea. It should also, ideally, mean the end of these archaic "must wait 5-10 business days" payment rules from sellers: checks will now clear almost immediately.<br /><br />Bill

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Posted By: <b>Julie</b><p>other people as well (especially card dealers!). After being caught "fundless" once, it never happened again!<br /><br /><img src="http://www.network54.com/Realm/jphotos/110103_diving_prv.gif">

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Posted By: <b>warshawlaw</b><p>The reason for holds is to give the bank time to contact us about bad checks, cancelled checks, etc., not for the banks to formally clear the items. Big secret: for years the Fed has cleared checks within 24-48 hours at the institutional level, meaning that the $$ have been there for the taking by the banks within a day or two of their tendering the items to the Fed for their region. I got a notice about this law from my bank at the office. The law allows the banks to forward electronic reproductions of checks to get them paid (i.e., Wells Fargo can email a check image to Citibank for payment rather than having to send over the real item through the Fed), which enables items to truly clear in 24 hours. What it does not do is increase the speed of the snail mail notice of a bad check that then is sent out by the bank. I am going to continue to hold check-paid shipments for a week before I ship.

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Posted By: <b>jay behrens</b><p>NSF noticed can show up almost a month later. I remember at the comic store we had a check bounce from a customer that was written about a month prior. I have no faith that this new law will speed up the NSF process.<br /><br />Jay<br><br>I saw weird stuff in that place last night. Weird, strange, sick, twisted, eerie, godless, evil stuff. And I want in.

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Posted By: <b>Bill Cornell</b><p>If I can see on-line that funds have been deposited, my assumption is that the bank can't come back later and tell me they goofed. Is that incorrect? Whether a new law makes banks report transactions any quicker remains to be seen, of course.<br /><br />Jay, you've been throwing around a lot of FUD (fear, uncertainty & doubt) lately. I hope no one starts a UPS thread...<br /><br />Bill

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Posted By: <b>hankron</b><p>I suspect that most people don't deposit their checks daily at the bank.

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Posted By: <b>petecld</b><p>Bill,<br /><br />I had a $6 check appear in my account and I mailed out the item the guy won. About 7-10 days later I got a letter via snail mail telling me it bounced and not only did the bank take out the $6 they also charged ME $9 for the bad check. (Bleepin) cost ME $9 for a bad $6 check.<br /><br />So based on my experience I would say you are mis-informed but different banks can have separate rules, I'd ask your bank. <br /><br /><br />

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Posted By: <b>Brian H (misunderestimated)</b><p>I'll get my MastroNet cards that I sent a check for any faster.... <br />Also, I think I'll continue to hold checks from people for my Ebay sales (unless I know them) for at least a little while...

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Posted By: <b>Elliot</b><p>Based on Canadian experience, where we have had 24 hour clearing seemingly forever---A virtue of nationwide banks, what I believe will happen is that checks will clear within 24 or 48 hours, so you need to have the funds in your account, and your opportunity for "float" will disappear. However, the bank will still have a predetermined amount of time (perhaps 7 days) to reject the cheque which will then cause the bank where you deposited the cheque to take the money out of your account (if the receiving bank rejected it). Your notification of this event could then come by snail mail, which would conceivably take another few days. My advice would be to continue to wait before sending out items if you have a concern about the validity of the cheque that you are depositing.