Check 21
The Check Clearing for the 21st Century Act, also
known as Check 21, was signed into law in October, 2003. Check 21
requires all banks to accept substitute checks as of October 28,
2004. The idea behind Check 21 is to improve the efficiency and
reduce the cost of the nation’s check collection system.
Check 21 makes it legal for financial
institutions to exchange electronic images of your checks instead of
the original paper check. When and if it is converted back to paper
it is called a substitute check. A substitute check is the legal
equivalent of the original check, and is derived from an electronic
image of the check.
What does this mean
for you?
-
Checks will clear faster, reducing the amount
of float time. If you rely on the float time of a check, you may
want to change your check-writing habits.
-
If you receive your original checks or images
of your checks with your monthly statement, you may start to see
substitute checks.
If you have additional questions about Check 21,
please do not hesitate to
contact us.
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