Check 21: New law ends checking traditions
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"WAMU (will) simply accept substitute checks," says Washington Mutual spokeswoman Lisa Margolin-Feher. "We're taking a more deliberate approach. We anticipate that we'll be evaluating where this goes and determine when the next step is appropriate."

"We'll begin exchanging a limited volume of check images after it goes into effect. We'll do some imaging, but only to a limited degree. Ultimate adoption of image exchange is a full build-out of systems and processes that could take the industry and Bank of America a matter of years."

What this means is that customers who have their canceled checks returned with their statements can expect to see a mix of substitute and original checks with the substitutes just trickling in at the beginning.

That leads us to one of several hot-button issues surrounding Check 21: returned paper checks.

Original checks
The ABA estimates that 64 percent of checking account customers do not get their canceled checks returned with their statement. Those customers have opted for truncation, or "safekeeping." Their bank keeps the original and gives it to the customer only when requested. Banking industry representatives say those customers will likely not see any difference under Check 21 until they request a check and instead receive a substitute or an image. The bank or credit union will include an explanation of Check 21 in those situations.

A sticking point with consumer advocates is that the 36 percent of customers who didn't agree to safekeeping will now have to accept an imitation, says Mark Budnitz, a law professor at Georgia State University College of Law.

"With Check 21, Congress imposed something on consumers. Consumers who said they wanted to get their original checks back didn't agree to truncation. That was an agreement these customers had with their banks. Now Congress says, 'We don't care. Take a substitute check instead.'"

Deflating the float
If you keep enough money in your account to cover the checks you write, you probably don't care about float. But banks rake in enormous amounts of money every year in bounced-check fees indicating that there are plenty of people living close to the edge with their checking accounts.

Check 21 will significantly reduce the float -- the amount of time that lapses from when your utility company receives your check to when your bank receives the check and debits your account.

"The float won't disappear," ABA's Hall says. "For local checks the float is about 24 hours today. That will remain the same. The big one will be nonlocal checks. For out-of-town checks you will notice that rather than the current two- to three-day float, it will clear in 24 hours if the bank uses electronic processing."

Keep in mind that the banking industry does not include the time a check is in the mail when it calculates float. Float begins when the check arrives, for example, at the utility company and ends when it shows up at your bank and is deducted from your account.

Also, Check 21 does nothing to shorten so-called check-hold periods -- the amount of time that an institution can hold checks you deposit before crediting your account. John Hall says the issue is being studied to see if changes are warranted, but, he says, many banks make funds available faster than the rules require.