Check yourself: New act speeds up check processing

Goodbye carefree debit spending, hello balanced checkbooks.

The Check Clearing for the 21st… Goodbye carefree debit spending, hello balanced checkbooks.

The Check Clearing for the 21st Century Act, more commonly known as Check 21, took effect throughout the United States on Oct. 28. Designed to speed up check processing, the act allows businesses and banks to electronically transmit checks to the Federal Reserve and to one another, speeding up the time it takes for a check to clear.

Until recently, a business would send a customer’s check to the Federal Reserve, which would issue a type of temporary “loan” to cover the amount of the check until it was processed by the bank and taken out of the customer’s account.

Under the new act, the check will be electronically scanned, immediately deducting it from the customer’s account.

According to the Federal Reserve’s Web site, customers will see two changes. The more noticeable change will be the immediate clearing of checks. Check-card holders will need to pay closer attention to their account balances. Some institutions, including National City, have increased their bounced-check fee since Check 21 came into effect last month, making the penalty for an oversight even more costly than before.

The second change affects only those who have their checks returned to them with their bank statements. Instead of the cancelled checks, many institutions will now send scanned images of the originals.

Increasing how quickly checks clear means banks may need to increase how quickly deposits clear, to protect customers from bounced checks.

But most college-aged customers haven’t heard much about Check 21, as was the case with both freshman Katrina Oscarson and junior Rebecca Hollerman. Although neither knew a great deal about the changes the Federal Reserve has implemented, both supported and agreed with them.

“Having worked in an independently-owned grocery store for three years, I can see how it would be a good thing,” Oscarson said. “My boss got screwed over a lot by bad checks.”

She added that Check 21 will help save smaller businesses the trouble of dealing with bounced checks.

Neither Oscarson nor Hollerman are avid check users, but both know people who are and who will be affected by these changes.

“Well, I think it’s a good idea,” Hollerman said. “They have to start somewhere.”

She sees other benefits to the changes, and said she thinks it will be a change for the better in the banking world. Her one concern is that deposits won’t clear before a check will.

“The problem is, you’re depositing something and you wont be able to write a check that day, since the one you write clears a lot quicker,” she said.

Otherwise, she believes it is a step in the right direction, and that it will make banking easier for both consumers and businesses.

“It’s so easy if you don’t have to write out the check, and they just scan it,” she added. “And if it’s a big deal for anyone, use a credit card.”