Things You Should Know About Check Writing, Check 21, Debits and Floats
It’s never a good practice to write a check to a merchant when you don’t have the funds to cover it. Even though it’s not a good practice to do this, it’s done every day by countless numbers of people. Depending on the merchant, you may be able to get away with floating a check. It might take 3 to 4 days for the check to clear your bank. However, more and more merchants are getting their money instantly from your bank.
Since 2004 merchants have had the ability to draw money from your checking account immediately; it works almost like when you use your debit card. The Check 21 law has made it harder for individuals to write bad checks. These days, more and more merchants have the electronic equipment to take an image of your check and send it electronically to your bank. Still, some merchants take the money out of your account immediately, and others take 3 to 4 days for the electronic check to clear your bank.
There have been times when I have had to float a check to get groceries. I would only do it when I knew I was getting paid in the next day or two. This is not a good practice to get into, because you never know if the check will hit your bank before your funds get there. That happened to me once. I learned a valuable lesson, because it cost me $35 in an overdraft fee.
Things are different now than they were a decade or more ago. Years ago you wrote a check for your merchandise, and the merchant made a trip to the company’s bank to deposit your check. Then the company’s bank would mail the check to your bank, which could take a few days before your account was credited. Thus, it might take up to a week or more for the funds to be debited from your checking account. The Check 21 law has made it a lot easier for the merchants to get their money. Check 21 makes it a lot easier for you too.
Prior to Check 21, I would have a hard time keeping my checking account balanced. I might forget to enter a check and then when it hit my bank, it would create an overdraft. Now, things are much easier. I have online banking and I can see almost in real time where my money is going. When I write a check at Target, my purchase is automatically paid for when they scan my check. When I make a purchase at Wal-Mart, the funds are deducted from my account within 3 days. I can check my bank online and see the debits and credits on my account. I don’t have to wait more than 3 to 4 days on any purchase or payment that I have made, unless I send a check in the mail. When I send a check in the mail, I factor in 2 to 3 days for the payment to reach the recipient.
When I pay the IRS each year, it takes about 3 days for my check to get there, and my check is debited immediately as soon as they get it. Thus, when I write a check that won’t be immediately debited, I must treat my account as if the money has already been debited from my account. If I were to spend the money that was allocated for an expense, then I have taken advantage of a float. A float is, essentially, the time it takes for a check that you have written to be debited from your account.
If you treat your checking account properly, the Check 21 law can help you to pay your bills and to make your purchases. This law also helps the merchants, banks, and other business entities get their money in a timely manner. However, if you take risks with your checking account by writing checks when your money isn’t in your account, the Check 21 law can be your worst nightmare. Just be careful, and always do what you know is right. If you know you don’t have the money in your account, don’t take the risk of writing a bad check.
