Float No More, Checks To Clear Bank Faster

When you write a check, you usually assume it won't clear for at least a few days, especially if your creditor's bank and your bank are in different cities far apart. It takes time for the check to be transported.

But the new Check 21 law allows banks to send "substitute checks" electronically -- a much faster process that may take only a day or just a few hours. And the banking industry may save at least a few billion dollars.

We went around Tyler to see what local consumers think about the new law.

"I think that it's fine," April Singley, a Target shopper, said. "I mean, you shouldn't be writing a check unless it was in your account anyway. I doesn't bother me at all."

But for those who take advantage of check floating, it's a different story.

"If it clears too fast, given if you're being truthful about it, if you write a check, you may not have the money until the afternoon to cover the check," Earnest Lewis, a local convenient store customer, said. "If you're too fast with it, it'll bounce."

"I particularly don't like it, but what can we do?" Billy Roberson, another customer, said.

So what can you do to protect your pocketbook? Well, if you're not sure you have enough money in the bank, use a credit card. Also, more and more people are getting overdraft protection for their checking account.

In reality, Check 21 will, at first, affect only about 5 percent of checks in the U.S., according to the Senior Vice President at Southside Bank.

"The checks that'll be digitally transmitted and digitally transferred into a substitute check will probably be the very large checks, at least at first," Brian McCabe said. "And the maybe year two or year three of this legislation, you might see smaller checks start to be converted."

The best advice: Write checks only for what you can cover.

According to the American Bankers Association, the new law will help banks detect fraudulent checks faster and hopefully, catch the perpetrators sooner.

Banks will profit in another way as well. Financial experts estimate, by the middle of next year, consumers could be bouncing 7 million more checks a month, and with it, will come an additional $170 million in fees.

Julie Tam, reporting.