If you browse personal finance information reguarly, you probably already picked up the news about Check 21. Check 21, which stands for "Check Clearing for the 21st Century Act," will become effective exactly one month from today. In short, the new act will allow financial institutions to clear checks based on electronic check images, and thus tremedously increase the efficiency in the check processing business.
This MSN Money article accurately captures many impacts to consumers, including:
- "Float" will almost no longer exist. Under the new act it only takes several hours instead of several days to clear a check. You and I probably cannot write a check to earn a few days' float.
- Tougher to stop checks because of the shortened processing time.
- No More Canceled Checks: Electronic copies of the original checks (called "substitute checks") will now have the same legal identity as the originals.
What should you do? If you don't periodically write check without the funds at the bank, you don't need to change much of your behavior just because of Check 21. But if you haven't done so, you surely want to follow the advices from the same article: use debit card vs check when possible, use automatic debit and leverage online bill payment. After all, check is less secure than more advanced payment methods.