If you use checks – and a lot of you still do – you ought to be aware of a federal law that took effect on October 28, 2004. The
Check Clearing for the 21st Century Act – "Check 21" for short – dramatically changes the way banks process checks and is cer-
tain to have an impact on consumers – especially those who've been known to "play the float."
10
Checks
The float?
OK. Let's assume you're not just
playing the innocent, and you real-
ly don't understand the concept of
"playing the float." Here's a recap.
The Float: A
Hypothetical Example
You don't have enough money in
your checking account to cover the
mortgage payment, but you will by
payday, which is only three days
away. So, you write the mortgage
check, drop it in the mail, and cross
your fingers that it won't make its
way through the banking system
before you get paid.
Yes, you know you're not supposed
to write a check if you don't have
enough money in your account to
cover it. But you're not out to
cheat anyone. You're just "playing
the float."
Your mortgage company is in
another state, so your check will
take two or three days to get there.
Facts about Checks and the
Payments System
News coverage of Check 21 contained some interesting and enlightening facts
about checks and the payments system.
• Only 36 percent of Americans now receive canceled checks in the mail with
their bank statements.
From a study conducted by the American Bankers Association and Dove Consulting.
Reported in The Wall Street Journal, 10/28/04
• Cash and checks accounted for 47 percent of consumer purchases in stores
in 2003, down from 51 percent in 2001, and 57 percent in 1999.
From the American Bankers Association and Dove Consulting study.
• More than 75 percent of business-to-business transactions are made with
paper checks.
From a survey conducted by the Association for Financial Professionals
Reported in The Wall Street Journal, 10/28/04
• Only 1 in 8 Americans balance their checkbook.
CNN/Money web site, 10/28/04
• According to the American Bankers Association, 2