What is the Check 21 Law. It is a federal law that is designed to enable banks to handle more checks electronically. This makes check processing faster and more efficient. If you are consumer who writes checks, you should have a working knowledge of Check 21. Under the new law, the checks that you and I write can be (and are sometimes) replaced with paper copies called substitute checks. This substitute check is the legal equivalent of your original check. I like to call the substitute check the first part of the law.

WHAT IT MEANS TO YOU. You may not get your original checks with your bank statement anymore. Most of us are accustomed to that. If you request a copy of a recently written check, you will receive a substitute check, a paper copy of the front and back of your check. The substitute check is slightly larger than the original. It is a legal copy of your check. You can also use it as proof of payment should the need ever arise. Some banks still send canceled checks with your account statements (consider yourself fortunate). You will continue to receive canceled checks unless your bank notifies you.
The Check 21 Law allows banks to process your checks quickly. This eliminates the float time on our checks. If you write a check on Tuesday thinking as long as you get the money in the bank by Thursday or Friday, you will be safe, think again, my friend. Instead of physically moving paper checks from one bank to another, Check 21 will allow banks to process more checks electronically. Banks capture a picture of the check, front and back, with the payment information and transmit it electronically. This whole process takes anywhere from 24 hours to 48 hours.

To envision a clearer scenario, suppose your checking account is with M & T Bank and you are paying your Sears bill. Suppose, Sears uses Charter One Bank to make their deposits. Once upon a time your M & T check would be mailed to Sears to pay your bill. Sears would then deposit your check into their account at Charter One Bank. Charter One Bank would then mail your check to M & T Bank to receive the monies due. This whole process would take several days. Check 21 eliminates that antiquated process.
If you are mailing a check to a creditor within the city you reside, according to the United States Postal Service, your creditor will receive your check the next day. With the enactment of the Check 21 Law, your check has an excellent chance of being processed that same day.

UNDERSTANDING THE DIFFERENCE BETWEEN CHECK 21 and programs that convert checks to electronic payments. If you write a check, your rights are governed by check laws and regulations. Some merchants, Price Chopper Food Markets for example use your check as a source of information to create an electronic fund transfer. Electronic fund transfers are governed by different laws and have *different consumer rights* than check payments. Under these circumstances merchants will immediately return your check to you before you leave the store. Consumers who write checks that are electronically processed must remember to enter electronic withdrawals in their check register.
Suppose your car insurance company is located in the city you reside in; you mail your premium on Tuesday, your car insurance company receives your payment on Wednesday. More than likely, your check will clear your bank that same Wednesday. Why is that? Most companies convert your payment electronically. Gone are the days when it takes 2 – 3 days for the bank to cash your check. Many consumers are not aware of this and are continually receiving bounced check fees. Remember, knowledge is POWER!

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