Transcript: Float and Check 21

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American Bankers Association

Kristin Arnold,

Standup Intro: When you use a debit card, the money leaves your account instantly. When you write a check, the money’s often gone the next day. Yet when you deposit a check, it can take a week for the money to hit your account. What’s up? explains.

Voice over 1: It’s called playing the float. Writing a check now, making the deposit later. It used to be a popular game.

Voice over 2: But it’s harder to play ever since late 2004. That’s when the Check Clearing for the 21st Century Act, known as Check 21, when into effect.

Voice over 3: What that law did was make it ok for banks to send digital images of checks you write to each other rather than the actual checks,. And since images travel at the speed of light, that pretty much killed your float.

Voice over 4: So much for your float, but what about the banks? Check 21 didn’t shorten the hold banks can put on checks you deposit: an array of possibilities ranging from one day to two weeks?even longer.

Voice over 5: The Check Clearing Act did order the Federal Reserve to ?study? funds availability for a couple of years. But when the study was over, they reported to Congress that hold periods for deposits aren’t ready to change yet. And no other studies are on the drawing board.

Standup: Bottom line? The Check Clearing Act allowed banks to virtually eliminate your float. But as far as the banks float? For the foreseeable future, that’s alive and well. For, I’m Kristin Arnold.