You already know in many ways how your checking account works. You write paper checks, withdraw money from an automated teller machine (ATM), or pay with a check card. Your paycheck might go by "direct deposit" into your account, or you might deposit checks at a bank's teller window or ATM.
But recently, you might have noticed changes in your checking account. The checks you write might be "clearing"—the money is being taken out of your account—more quickly. Some checks you write might be listed as "ACH" transactions on your bank statement. Instead of receiving cancelled checks back from your bank, you might be receiving "substitute checks."
In This Section
Checks are being handled in some new ways these days and those changes can affect how you handle your money.
You might not be able to get your original checks--or even copies of your checks--back from your bank.
Electronic processing may be even more common in the future, but one thing will not change: You will continue to have the right to dispute any mistakes and clear up problems with your account, whether or not you have the original check.
Does it matter if my check is processed more quickly?
Traditionally, when you wrote a check, the paper check was transported from bank to bank before the money was taken out of your account. Now that many checks are being processed electronically, money may be taken out of your account more quickly. To avoid bounced checks and related fees, you must be sure you have enough money available in your account to cover each check when you write it (and when you withdraw funds at an ATM).
Although electronic processing might mean that the check you write will clear more quickly, the funds that you deposit might not be available to you any more quickly. A federal rule governs the maximum time your bank can wait before making deposited funds available to you, and that rule hasn't changed. That's why you need to know exactly how much money is available in your account at the moment you write a check. For example, money from a check you deposit on a Monday might not be available until the following week. So, if you count on that deposit when you write a check on Tuesday to pay a bill, that check might bounce.
Also, be sure that the available account balance you're counting on does not include funds from your bank's "overdraft protection" program. It's possible that an account balance statement could include an overdraft protection amount, which could lead you to believe you have more money in your account than you really do.
What are the different ways my check can be processed now?
Remember, the way your check is processed will affect how quickly your check will clear and you have only limited ability to control the way your check is processed. A check you write can be processed in several ways:
Can I tell how my check is being processed?
You probably will be able to tell how your check was processed, after the fact, by looking at your bank statement. Your bank is required to list every EFT transaction in your monthly bank statement, including the dollar amount, the date the transaction cleared, and the name of the recipient. Electronic transactions may be grouped together, apart from your regular check transactions.
If you receive a paper substitute check, you will be able to identify it by this statement: "This is a legal copy of your check. You can use it the same way you would use the original check."
If a merchant wants to turn your paper check into an EFT, the merchant should give you notice that your payment will be processed that way. There might be a sign at the cash register, or the cashier could inform you.
May I choose the processing method for my check?
Not usually. Check processing involves several parties-you, the person you're paying, that person's bank, and your bank. Each party has an interest in efficient, reliable check processing. Somewhere along the line, one of the parties might choose to process your payment electronically.
However, you can contact a party to whom you regularly mail checks, for example, the phone or credit card company, and tell them not to turn your paper checks into electronic ACH transactions.
Can I get my cancelled checks with my bank statement?
No law requires your bank to send you your cancelled checks. If you receive your checks or copies of checks, that's usually because of your customer agreement with your bank and your bank's policies. Many consumers don't receive their checks or even copies of their checks.
If you've usually received cancelled checks with your bank statement, you could start receiving substitute checks—the special paper copies created under the Check 21 Act—instead of, or in addition to, cancelled checks.
Even if you do not usually receive cancelled checks, you may ask your bank to provide you with copies of specific original checks, or the cancelled checks themselves. In most cases, your bank will be able to give you a copy of the check. But your bank might not always be able to. When a paper check is processed electronically, the original check is typically destroyed.
What if something goes wrong?
Let's say the wrong amount was deducted from your checking account. Or maybe you've discovered a payment that you never authorized. No matter how your check was processed, you should contact your bank right away. The bank might be able to clear up the problem quickly.
Even without a cancelled check, you can prove you made a payment with your bank statement, which shows the date and amount of the payment. You also might have a receipt from a retail transaction. In any case, the law does not require you to have the original paper check, or even a copy of it, to resolve a problem with a bank.
Generally speaking, you will not be held responsible for processing errors or transactions you did not authorize. Different laws and rules apply, depending on how your check was processed.
What if I made the payment another way?
Rules that govern EFT payments will apply if you make an ATM withdrawal, or if you use a debit card (check card), debit card number, or your checking account number without writing a paper check.
You could also make a payment through a "demand draft" or "remotely created check" (RCC) by authorizing someone to withdraw money from your account without your signature. For example, you could authorize your credit card company over the phone to make an RCC for payment on your credit card account before the monthly deadline. The Uniform Commercial Code applies to RCCs. While RCCs can be useful, you must trust the person or company you allow to create an RCC because the RCC does not include your signature, and proving that you did not authorize the payment could be hard.
What if I can't resolve a problem with my bank?
Contact your bank first. You might also contact the recipient of the payment. If you are unable to resolve the problem through the bank, and a national bank is involved-a national bank has the words "National," "National Association," or "N.A." in its official name-you may contact the Customer Assistance Group at the Office of the Comptroller of the Currency toll free at 1 (800) 613-6743.
For complaints about state-chartered financial institutions, contact the relevant state attorney general or state banking department. Links to state attorneys general can be found on the Website of the National Association of Attorneys Generals. The Conference of State Bank Supervisors lists state banking department links. You may also contact the Federal Reserve Board, or the Federal Deposit Insurance Corporation regarding state banks that are not members of the Federal Reserve System.
If you have a problem with the recipient of your check—an entity other than a financial institution, such as a department store—contact the Federal Trade Commission toll free at 1-877-FTC-HELP (1 (877) 382-4357). More information about contacting the FTC is on the Web.