New law would speed up check cashing process
8/21/2004 10:22 PM
By: Sarah Sevier; News 10 Now Web Staff

 

A new federal law is in the works to speed up the check cashing process. Bank officials say they're trying to beat check floating, and people who write checks and take advantage of the time it takes the bank to process them. Friday is payday. Do you think if you write a check on a Wednesday, but don't have the money in the bank, you'll be safe? 

"I did. I did and it cost me a couple of financial charges in my account," said Greg Huang, who’s concerned about the new law.

Bank officials say when a new law takes effect nationwide -lots more people will bounce checks.
It's called the Check Clearing for the 21st Century Act, nicknamed Check 21.

As of October 28th, it will only take a day or so for checks to go through. That is if your bank participates.
In most cases it saves them thousands of dollars to do so. Basically the law makes these 'substitute checks' legal.

Once the check is deposited it's scanned into a computer. Since the image will be a legal document banks will be able to quickly withdraw the money from your account electronically.

Currently banks must send your original check by mail to get the money -often across the country. Bank officials say it's not always just individuals that use float time to their advantage.

"Float for a corporation could mean millions of dollars and there are a lot of companies that have a paying bank or have their bank in Alaska or Seattle. They pay their bills in New York so by the time it gets from New York to Seattle and back it could be three, four, five, six, seven days," said Casimir Sewruk, from Partners Trust Bank.

Check 21 means an end to storing boxes full of checks for many. “The general misconception of the public will be that the banks are forcing them to receive images of their checks they can't get their physical checks back and that's not true at all," Sewruk said.

People will be able to get the 'substitute check' just as legal as the original right online, which will hurt the people known as “chronic floaters.”

"They're going to get more bank charges probably from bounced checks. That may increase but they're just going to have to be more careful," said Sandy Tucker, a Check 21.

"Especially during this difficult time because of lot of people have lost their jobs. The economy is not in good shape. Yeah it could happen a lot," Huang said.

Bank officials said it will take around three to five years for nearly all financial institutions to convert.

If you would like more information on Check 21 you can check with your bank or log on to the Federal Reserve website at www.federalreserve.gov.