
5 mobile bank apps that help you save money
These five banking apps can help you save money even on a tight budget.
Check kiting is an illegal activity it pays to understand. Bankrate explains what it means.
Check kiting is the illegal process of writing a check off of a bank account with inadequate funds to cover that check. Check kiting relies on the fact that it takes banks a few days (or even longer for international checks) to determine that a check is bad.
Federal banking regulations state that funds must be available in a specified time. The period dictated by Regulation CC is usually shorter than the time it takes for the bank that the check is drawn against to return the check.
Some entities that participate in check kiting do so to obtain a short-term loan. Others want to intentionally defraud the bank. Simple check-kiting schemes involve a check from a single bank, but more sophisticated schemes feature checks from multiple financial institutions.
Businesses and individuals who want to gain access to funds that they do not have may participate in check kiting. For example, assume that a business has checking accounts with two different banks. It needs to make payroll, but it is $10,000 short. The business writes a check for $10,000 from account A and deposits it into account B. Thanks to Regulation CC guidelines, the business receives access to the funds the next business day. It takes two to three days for the check to clear account A. On day two, the business makes a deposit, narrowly preventing the bank from returning the check. Even though the business ultimately deposited the funds into account A, this is still an instance of illegal check kiting.
The following is a more sinister example of check kiting. An individual builds an established relationship with a bank. He then writes and deposits a check for $5,000 from bank A and a check for $5,000 from bank B into account C. Neither bank A nor bank B has money to cover the checks. As soon as the funds are available at bank C, the individual withdraws all of the money. When the banks return the bad checks, bank C is left with a shortage of $10,000.
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