mybills
10-16-2004, 06:45 AM
Some of this was on the news, here's more...
A sweeping new federal law nicknamed "Check 21" takes effect on Oct. 28, 2004. This law will change the way your checking account works, giving digital copies of checks the same validity as paper ones. You may hear about this law from your bank, or, due to loopholes, you may never hear about its resulting impact. But you definitely want to be up to speed on the upcoming changes.
Here's a rundown of the important changes that will result from "Check 21."
NO MORE FLOAT: The "float" is the time between when you write a check and when the money is taken out of your account. Say goodbye to the float, forever. This law allows your check to be handled electronically once it has been received, just like a debit card payment. You dare not write a check unless you have the full amount in your account the moment you sign your name -- that is how fast the check will be processed. You cannot afford to be socked with big overdraft or bounce fees.
NO MORE STOP PAYMENTS: Remember the good old days when you could stop payment on a check because you changed your mind or the service was unacceptable? Well, you can kiss those days goodbye as well. You will no longer have the luxury of time to change your mind.
NO MORE CANCELLED CHECKS: You won't be able to get your original paper checks back because your bank will not have them. Your paper checks are digitally copied to create a "substitute check" and then destroyed the moment they are accepted as electronic transactions. Cancelled checks for proof of payment or to fight a forgery are a thing of the past. You want to make sure your bank sends you copies of your substitute checks, which will be legal proof of payment. Watch out for fees associated with a substitute-check-returning account. Look for another bank if your bank charges a high fee to get copies of all your checks as substitute checks.
DEPOSITS STILL ON HOLD: Just because your checks will clear faster doesn't mean your deposits will be available to you any sooner. The new law does not shorten check hold times.
WATCH YOUR ACCOUNT: The possibility exists that a check can be turned into an electronic transaction with a "substitute check" and then the original paper check is not destroyed, allowing it to make the rounds and be credited against your account a second time! Now more than ever it is important that you keep an eye on your account for such errors. If you spot an error or fraud the bank must put the money back into your account within 10 business days, but only if you have not waived your rights to have "substitute" checks provided to you.
DON'T SIGN UP FOR VOLUNTARY CHECK TRUNCATION: You bank may ask you to agree to "voluntary check truncation." This means you give up your rights to have copies of your substitute checks returned to you. The Consumers Union warns us that we will have even fewer consumer rights under voluntary non-return of our checks than we will have under the full provisions of Check 21. For this reason they recommend that we decline invitations from our banks to convert to "voluntary check truncation."
While I've only summarized portions of Check 21 for this article, you owe it to yourself to learn as much as you can about how this law will affect you. You can learn more about Check 21 and its provisions at the Consumers Union Web site at www.consumersunion.org and the American Bankers Association's "Check 21 Resource Center" (www.aba.com).
A sweeping new federal law nicknamed "Check 21" takes effect on Oct. 28, 2004. This law will change the way your checking account works, giving digital copies of checks the same validity as paper ones. You may hear about this law from your bank, or, due to loopholes, you may never hear about its resulting impact. But you definitely want to be up to speed on the upcoming changes.
Here's a rundown of the important changes that will result from "Check 21."
NO MORE FLOAT: The "float" is the time between when you write a check and when the money is taken out of your account. Say goodbye to the float, forever. This law allows your check to be handled electronically once it has been received, just like a debit card payment. You dare not write a check unless you have the full amount in your account the moment you sign your name -- that is how fast the check will be processed. You cannot afford to be socked with big overdraft or bounce fees.
NO MORE STOP PAYMENTS: Remember the good old days when you could stop payment on a check because you changed your mind or the service was unacceptable? Well, you can kiss those days goodbye as well. You will no longer have the luxury of time to change your mind.
NO MORE CANCELLED CHECKS: You won't be able to get your original paper checks back because your bank will not have them. Your paper checks are digitally copied to create a "substitute check" and then destroyed the moment they are accepted as electronic transactions. Cancelled checks for proof of payment or to fight a forgery are a thing of the past. You want to make sure your bank sends you copies of your substitute checks, which will be legal proof of payment. Watch out for fees associated with a substitute-check-returning account. Look for another bank if your bank charges a high fee to get copies of all your checks as substitute checks.
DEPOSITS STILL ON HOLD: Just because your checks will clear faster doesn't mean your deposits will be available to you any sooner. The new law does not shorten check hold times.
WATCH YOUR ACCOUNT: The possibility exists that a check can be turned into an electronic transaction with a "substitute check" and then the original paper check is not destroyed, allowing it to make the rounds and be credited against your account a second time! Now more than ever it is important that you keep an eye on your account for such errors. If you spot an error or fraud the bank must put the money back into your account within 10 business days, but only if you have not waived your rights to have "substitute" checks provided to you.
DON'T SIGN UP FOR VOLUNTARY CHECK TRUNCATION: You bank may ask you to agree to "voluntary check truncation." This means you give up your rights to have copies of your substitute checks returned to you. The Consumers Union warns us that we will have even fewer consumer rights under voluntary non-return of our checks than we will have under the full provisions of Check 21. For this reason they recommend that we decline invitations from our banks to convert to "voluntary check truncation."
While I've only summarized portions of Check 21 for this article, you owe it to yourself to learn as much as you can about how this law will affect you. You can learn more about Check 21 and its provisions at the Consumers Union Web site at www.consumersunion.org and the American Bankers Association's "Check 21 Resource Center" (www.aba.com).