Remember the good old days when you could assume a few days 'float' time between when you write your check and when the funds came out of your checking account? Well, with the new Check Clearing for the 21st Century Act (Check 21) now in effect, checking float has become obsolete.
With Check 21, your checks will now clear in hours rather than days. Don't get sunk with overdrafts! We're here to help with several service options associated with our checking accounts.
Auto Transfer - Set up your account to withdraw from your Share Savings or Money Market account in the event of an overdraft from your checking account.
Overdraft Line of Credit - Your own personal line of credit up to $20,000 used in $100 increments as checks or debits pass through your checking account and sufficient funds are not available. Use this line of credit to cover overdrafts at anytime. Our line of credit is available on approved credit, with low rates and easy repayment terms.
Overdraft Privilege - This service saves you the additional expense and inconvenience of overdrafting your checking account. With Overdraft Privilege, we'll pay your qualified overdrafts up to a total of $500, which must be brought to a positive balance within 30 days to continue qualification for this service. There is $20 per-usage fee for this service and certain conditions apply. Contact our Member Services Department for further details at 1-800-849-5600.
Questions and Answers about Check 21 and Substitute Checks
What is Check 21? The official name of Check 21 is "Check Clearing for the 21st Century Act". The new Act was passed by Congress in the summer of 2003 and signed into law by President Bush on October 28, 2003. The new law went into effect on October 28, 2004. Check 21 provides for the creation of a new negotiable instrument known as a "Substitute Check".
What are the benefits of the new Act? There are several benefits that will be realized for both credit unions and credit union members including:
- Provides for faster collection, return of check
- Eliminates the risk of transporting documents (transportation risks, weather, etc.)
- Removes the legal barriers to truncation, encouraging financial institutions to begin using image technology
- Improves the efficiency of the U.S. payment system
What is a Substitute Check? A Substitute Check is a paper reproduction of the original check. The Substitute Check is created from an image of the original check and also must:
- Obtain an image of the front and back of the original check;
- Bear a MICR line containing all the information appearing on the MICR line of the original check;
- Conform in paper stock, and otherwise with generally applicable industry standards for Substitute Checks;
- Be suitable for automated processing in the same manner as the original check.
Substitute Checks have been referred to as IRDs or Image Replacement Documents. The terms are interchangeable but the Act specifically refers to these new items as Substitute Checks.
Is a Substitute Check a real check? If a Substitute Check meets all the legal requirements of the original check, then the Substitute Check is indeed a real check and possesses the same legal equivalence of the original check. No financial institution can refuse to pay a Substitute Check.
When could a Substitute Check be received? You could possibly see a copy of a Substitute Check when a copy is requested or when you're reviewing images of your checks. You may also come into contact with a Substitute Check when a deposited check is returned to you. The returned deposited check may have been converted to a Substitute Check. This document is a legal document and must be accepted.
What happens to the original check? At some point in the processing of the check, the original item will probably be destroyed. The destruction will occur once an electronic image of the original has been obtained. Each financial institution will determine their retention policy for the original check.
What does truncation mean? Truncation occurs when an original paper check is removed from the collection process. The check's information is stored electronically and the original check is destroyed. Members who do not receive original checks back with their account statement have what is known as truncated accounts.
What type of checks can become Substitute Checks? Every type of U.S. Check can become a Substitute Check including:
- Consumer Checks
- Business Checks
- Government Warrants
- Treasury Checks
- Money Orders
- Controlled Disbursement Checks
- Payable Through Drafts
- Traveler's Checks
Do we have to accept Substitute Checks? YES! Everyone, including banks, credit unions, paying customers, depositing customers, consumers, corporations, the Fed, must accept a legitimate Substitute Check for payment.
What do I do if I have a problem/error with a Substitute Check? At ElecTel Cooperative FCU, each check you write includes a carbon copy. As a result, you do not receive your original checks back in your account statement. Therefore, any problems/errors can be handled by ElecTel Cooperative FCU just like any other error including encoding errors, etc. Please contact our Member Service Department for additional details at 1-800-849-5600.