2005 January | Wheatworks Blog: Financial Matters

Home

Archive for January 2005

Check 21: Too One-sided?

1/23/2005, 5:35 pm

Last September I posted a piece about the new Federal law titled “Check Clearing for the 21st Centry Act (aka Check 21)”. This law eliminates float by making a digital image of check a legal substitute for the actual paper check. Banks no longer must transfer paper checks to move funds from an account a check is written against to the account into which the check is deposited.

Unfortunately, Check 21 doesn’t seem as fair as it should to some consumers. On one hand, banks are allowed to process the checks you write and remove funds from your account as soon as a digital transaction allows. However, Check 21 doesn’t go far enough. Banks are still permitted to hold deposited checks for 5 or more days before releasing the deposited funds for your use.

An article at Bankrate.com offers a good summary of Check 21, how banks are implementing it and what some banking customers and consumer advocates are disturbed about.

The whole issue may be a tempest in a teacup at this point in time, anyway. Few banks have fully implemented the digital processing Check 21 allows and, even now, it’s uncommon for a bank to hold deposits for the full time permitted by law.

Share This Post ...