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September 28, 2004 Check 21 Effective Oct. 28 A new federal law, Check 21, will allow banks to handle more checks electronically, making check processing faster and more efficient, according to Debra Pankow, North Dakota State University Extension family economics specialist. Check 21 becomes effective on Oct. 28, 2004. “Before Check 21, a check sent somewhere for payment had to be physically transported back to the financial institution on which it was written for payment to be withdrawn from your account,” Pankow says. “After Oct. 28, banks can accept electronic information.” However, Pankow points out that not all banks will want to accept electronic checks. If a bank requires a paper check, a financial institution may make an image of the actual document and process it that way. What does this mean for individuals? “If you previously received canceled checks, you will no longer,” Pankow says. “You will receive a mixture of canceled checks and canceled substitute checks. Your original checks will be destroyed after 30 to 60 days, but institutions will keep a representation of the checks for up to seven years.” In addition, you may have to pay for a check image if you need one as proof of purchase. The bottom line, according to Pankow, is that Check 21 will speed up processing of checks. So, if you are in the habit of writing a check or paying bills right before payday, you may find yourself having overdraft problems. For more information, see the Federal Reserve Board’s Frequently Asked Questions at: http://www.federalreserve.gov/paymentsystems/truncation/faqs.htm. ### Source:
Debra Pankow, (701) 231-8593, debra.pankow@ndsu.nodak.edu |
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North Dakota State University |
