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Check 21 and How It Affects You
What is Check 21?
- "Check 21" is a new law effective October
28, 2004, that allows financial institutions to send, receive and process
electronic
images of checks instead of having to transport the physical
paper checks for the purpose of “clearing” the checks.
- Any financial institution within the payment process may convert
the actual physical check and provide an image in its place.
- If an institution elects NOT to accept
images, a replacement document of the original item will be
issued. That replacement is called
a "substitute check" and is the legal equivalent of
the original item as long as it meets certain requirements.
- Although many financial institutions (including Virginia Credit
Union) are not ready to accept or process images, most will
be working toward using this new technology in the future to operate
more efficiently and collect funds more quickly.
How will Check 21 affect you?
- Checks will clear faster in the future
since the physical paper checks won’t have to be transported
to the paying bank for clearing. Because checks will clear
faster, you may have
less time to place a stop payment on a check if you ever
need to do that.
- If a check you deposited to your account
is returned unpaid for any reason and is charged back to
your account, you may receive
a "substitute check" instead of the original check you
deposited. Again, a "substitute check" is the legal
equivalent of the original item.
Consumer Tips
Keep tabs on your account balances. Checks
will clear faster, so it's important funds are available in your
account
when you write
a check. Online Home
Banking and QuikLine
Phone Banking are
easy ways to check your account 24 hours a day. Sign
up for free automatic overdraft
protection for your checking
account. Then transfers can be made automatically from savings
or other accounts you designate. Apply for a line of credit as
additional overdraft protection.
Please contact us if you have any
questions about Check 21 or if we can help you in any way.
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