If you’ve counted on those few extra days from the time you write a check to a utility company and the time the check clears your bank, beware.
Several of the nation’s largest banks are now shifting from the traditional method of processing checks to a new electronic process. The new process will shave off a day or more from the traditional process it normally takes for your check to clear.
You may not know this but often the PO box to which you mail your utility payment is actually the bank which processes your payment for your phone company or electric company, for example.
That bank processes the check then sends it back to your bank using one of the Federal Reserve Bank’s as a clearinghouse. Since the Federal Reserve Bank processes millions of checks a day there has always been a gap in time from when you mail your check until it is debited from your checking account.
The new process involves the bank receiving your payment scanning your check and electronically debiting your account often within a day. The check is then destroyed and doesn’t have to be returned physically to your bank in order to debit your account. The method cuts down on the costs to the banks and means your account is debited more quickly than the old way.
How will you know if your utility company is using this new method ? The company must notify you in writing to inform you of this new payment process. You can also “opt-out” of this new process by contacting the company in writing.
If your finances are tight and you’ve used that “float” time to cover yourself, you may need to change your monthly bill-paying habits especially if you don’t want to get hit with late fees or returned payment fees.
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