Bouncing Checks Can Be Your Future

Baby boomers are notoriously bad about balancing their checkbooks...part of the, "I have checks, so I must have money!" generation. So I guess it is a very good thing that kids today are well-versed and comfortable using plastic debit cards.

Why...because these times, they are a changin'...that is the rules revolving around checks and checking accounts are changing. Last week, unnoticed, a new and dramatic rule went into affect. The "float" period that most of us grew up with is now a thing of the past.

To understand that term better, I am talking about the deceptive dollar value of your checking account cash balance that is created by the length of time it takes the recipient of said check to cash it and have it register on your checking account.

For most of us, including myself, we grew up in the "pre-technology age" of the last few decades. There were many a day when you could write a check on Thursday evening, knowing full well that the check wouldn't leave the store until Friday, and since the banks were closed over the weekend, it wouldn't reach your checking account till at least Monday.

Well granted, this is not a "best practices" scenario, because as responsible adult consumers we are not supposed to write check on money that we don't have in our accounts at that time. And I do understand living paycheck to paycheck and there never being enough money to buy the kids milk, or pay the electric bill before they shut it off. But people caught in this Russian roulette syndrome of trying to match in-flows and out-flows could get burned by the new system that is clearing checks faster than they anticipated.

The year of 2004 brought us the infamous Check Clearing Act for the 21st Century, fondly called, or cursed, depending on your point of view, Check 21. This act made it easier, for the banks, mind you...to process checks electronically without needing to transfer the paper checks from one location to another. While it also made it harder for consumers to receive a copy, called a "substitute check" that is legally equivalent to a cancelled check, for any dispute with a merchant or creditor.

I do admit begrudgedly that moving 35 billion paper checks each year really had to end, even if it is only to save the trees involved. But this created an unfair advantage to banks to charge extra fees for substitute paper copies.

Now to old timers like me, that was a rude awakening when I no longer received my canceled checks in the mail, with all the different bank stamps on them testifying to their journey through the system. There was something comforting about having that piece of paper in my hand. Then the next insidious step towards a cashless society, or paperless, if you go for the latest infusion of new dollar coins, was the implementation of "accounts receivable conversion."

This step is where they convert the paper check that you so lovingly wrote...and prayed that it reached the back AFTER your money did...into an electronic payment. You check number will not necessarily show up on your statement, but may be replaced by an electronic entry that shows the amount and the debit to your account.

All of this leads to the change that was implemented this past Friday, and basically ignored by the mass media, called "back office conversion". In the past you wrote a check, the store took them to the back office, thus the name, and then there was the daily trip to the bank to get them cleared...No more!

Now they can convert your check to an electronic payment that can reach the bank during the day, or at the day's end, and most assuredly overnight!

The proper English and checkbook challenged translation of that, "Goodbye float! No more making a purchase on the weekend and not expecting to clear till Monday.