Bank Jr - Money Tech

You might have heard your parents talk about writing checks. When your mom gives a check to a clerk in a store, the store people usually take all their checks and put them into a bag. A store worker fills out a deposit slip showing the total of the checks received that day and takes it and all the cash and checks for that day's business to a bank. The next day a bank employee looks at your mom's check and realizes it's from a different bank. The store's bank pays the store the money your mom meant to give it. Then the store's bank sends the check to your family's bank and asks it for that money to pay them back. Your family's bank sends that amount to the store's bank.

			Sometimes even though the store's bank paid the bank right away, it takes two or three days for the money to move from bank to bank and end up where it should. Then the next day, the money actually leaves your mom's bank account. That delay in timing "until the check clears "is called "float" or "float time." Some people have taken advantage of that, knowing they can write a check today, but it really takes a few days for the money to leave their account. Some have even written checks for more money than they have, believing they will get paid or make a deposit before some of those checks clear or the float time is up. No more! A new law called The Check Clearing for the 21st Century Act (Check 21) was signed into law on October 28, 2003 and became effective October 28, 2004. It makes it possible for banks to use a new process known as "check truncation." Banks will use new technology to change the information on paper checks into digital pictures that are processed electronically through the banking system. Electronic images move much faster; checks clear faster so the float time will be reduced. Families should plan on having the money represented by that image gone out of their accounts the next day.

			Did You Know? Banks process more than 40 billion checks a year! The average value of those checks is $925.