Special Report: Check 21

Paying bills online and using ATM cards at the store both have modernized our checking accounts.

Now, the Federal Reserve is going a step further. Starting October 28, a new law called Check 21 will take effect -making checks clear in hours rather than days.

David Floreen, Massachusetts Bankers Assoc.
It's squeezing out the inefficiencies that are ever present in today's system.

Here's the difference, traditionally, most personal checks get physically shipped between three different banks before they clear. The whole process takes two to five days.

Here's how Check 21will work. Once you deposit a check in the bank, an image of it will be sent electronically to the other banks. This way, your check will clear in a few hours.

Gail Hillebrand, Consumer's Union
"It's now more important than ever, never to write a check unless the moneys already in the account."

Once Check 21 takes effect, banks will no longer have to send you your cancelled checks because the checks will no longer exist. They'll be replaced by this substitute checks- which are legal copies of the originals. Consumer reaction is mixed.

Ally Lynch, Florida
"I think it's excellent, speed up the process."

Kelly Hutchinson, East Boston
"I wouldn't really trust a bank with something like this."

Melvin Otero, Roslindale
"I think it could make a big difference, as long as security measures set up because fraud is a big thing now."

David Floreen, Massachusetts Bankers Assoc.
"It's a lot more efficient and cuts down on fraud. And puts money back into people's accounts quicker."

Check 21 starts at the end of October, so in the mean time. You might want to balance that checkbook. And come November, take a closer look at your bank statement.

Two consumer groups are requesting banks waive bounced check fees immediately after Check 21 becomes law. In response, industry sources say, if you have questions regarding any fees to your checking account, always talk to your local bank or credit union.

For More Information:

Massachusetts Bankers Association
https://www.massbankers.org/

FAQ's from the Federal Reserve
http://www.federalreserve.gov/paymentsystems/truncation/default.htm

Consumers Union
http://www.consumersunion.org/pub/core_financial_services/001332.html