"Check 21" Putting Bank Customers in Check

By: Karen Kostko
By: Karen Kostko

It's called "The Check Clearing for the 21st Century Act," better known as "Check 21." Check 21 is a new federal law that was signed by President George W. Bush last year. The law goes into effect this October.

The law is geared at making processing checks a lot easier and a lot faster. Instead of physically sending cancelled checks back to the consumer or transporting them from one bank to another, checks will be photocopied and either sent electronically or a copy, not the original, will be sent back to the consumer at their request. The original check will be shredded after a certain length of time.

"We'll be able to offer images of checks to people in a number of ways," says Gerry Klein, Chief of Information Officer of Peoples State Bank in Wausau.

Another factor under the new law, electronic check processing is a lot faster, which cuts down the so-called "float time," so if you think you have a little time before the funds are actually deposited, you may want to reconsider.

"Float has historically been three to four days over time, it will reduce and end up being only a day," says Klein.

Bottom line, if the funds aren't there in the first place, you may want to hold off writing that check until they are. All bank customers should receive notice of this new law if they haven't already.


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