The “Check Float” Is On Its Way Out

By Brian Wolfman

You probably take advantage of the “check float” from time to time; I know I do.  That’s the idea that you can write a check when there are insufficient funds in your checking account and then deposit money in the account in the next few days, before the check clears, without worrying about bouncing your check.

You may not want to do that anymore.  I was surprised to read in Michele Singletary’s article in today's Washington Post that the “check float”  is on its way out.  Beginning tomorrow, banks can  use new technology that will clear the check -- that is, take the funds out of your account and make them available to the payee -- almost immediately and definitely by the next day.  Singletary explains that this change will not occur on an industry-wide basis overnight because the necessary technological systems and legal protections are not fully in place.

This change will have some advantages to consumers, including when dealing with a payee who will not consummate a transaction until the consumer’s check has cleared.  It may reduce the need in some circumstances for certified checks or money orders.  And retailers will like the new regime, as they will have use of your money sooner.  In any event, beware: The “check float” will become a thing of the past.  Singletary’s article explains the technology that will make this happen.  Definitely worth reading.

Comments

[Clifton Hoke]

Seems to me that in today's digital world where a common department store or insurance broker can scan a written check for the purchase of an item and give you back the check as a receipt the following conditions:
'2 day rule to clear',
'you don't have an account with us'
'it's Friday after 4 p.m.,therefore funds will be available Tuesday'
'it's Saturday 8 a.m., therefore funds will be available Tuesday'
'Saturday is not a business day*'
were made void by the passage of the "No Float Law" that came into effect March 2007. Wasn't that law Federal recognition of the current state of digital reality?

Funds should be available upon proper presentation of
the financial instrument, e.g., I'm the named-person on the check give me the cash. Thank you very much.

*if Saturday is not a business day,
why are the doors open?
>>>they're doing it for free?
>>>for my convienance?

My convienance and expectation is that when I present a valid check to a bank, that the bank give me the cash right now.

What do you think?

Clifton Hoke

[nancy]

A widely known department store in my area today refused to allow me to pay by check (claiming, among other things that few people use checks these days). Reply please.

[Brian Wolfman]

Really? Once checks clear immediately, it seems the pressure on the banks to free up the money for consumer use will be enormous. Do you have info suggesting that the banks plan on continuing to put these long holds on its customers' money even after the check has cleared?

[Diane]

There's one big problem though. While checks that you write will be cleared and the funds available to the payee much faster, if you DEPOSIT a check into your account, the banks are STILL using the 3-5 day hold on desposited checks ! So, while you lose the float on one end, the bank is holding you up for 3-5 days even if the funds are actually available on the next business day. Whether that practice will stop remains to be seen. The banks just fall back on 'it's bank policy' if you question them on it.