Bringing Back the Bank Float


It seems like a quaint notion, like rabbit-ear TVs or family-owned department stores. But unlike those relics, the fine art of floating a check to delay payment isn’t dead, it’s just changed form. Here are three moves you can make to revive the spirit of the float, even in the midst of the digital age.

First, the back story. Floating checks used to be a time-honored tradition. essentially you cut a paper check and get quick credit for payment, even though it might take the bank five days to pull the money out of your checking account.

But banks and creditors got wise, and lobbied Congress hard to change the rules. That’s one reason why, in 2003, we got the Check Clearing for the 21st Century Act (more commonly known as “Check 21”). The legislation enabled banks to use electronic versions of checks to pass checks through the system more quickly and more efficiently. In the process, float times were cut significantly. Now it’s common for a check to be “cleared” within a day of the bank receiving it.

But you can fight back and beat Check 21 in a variety of ways. Let’s examine the best ones.

Get direct deposit. A business owner who uses bank wire transfers to get paid knows the value of direct deposit. Now employees can easily get in on the action. With direct deposit, instead of waiting for your employer to cut you a check, then wait even more while you schlep the check down to your bank for deposit and wait a few days for it to clear, you get access to the money almost immediately. That should shave a few days off the time you have to wait for access to your pay.

Let your bank figure out your balance online. Instead of plopping down at the kitchen table with your green eye-shaded visor, calculator and checkbook, activate your checking account online and get immediate information on the status of your check payments. When you know exactly where you stand with your checking account — to the penny — it’s much easier to manage payments and even steer money in from savings accounts to cover checks. Banks make the latter move even easier by offering a service where the bank dips into your savings to cover any potential overdrafts in your checking account. Expect to pay a few bucks a month for the transfer protection, but it’s well worth it in the long run.

Ask your creditors to change your bill dates. If you get paid on the 15th of the month, and your car insurance, for example, is due on the 10th of the month — ask your auto insurer to change your bill date to accommodate your payroll timetable. Creditors are almost always glad to change bill dates and you’ll have more time to cover your bills before they’re late — just by moving your bill payment dates to your advantage.

Let’s face it, the days of the venerable check float are behind us. But you can still take concrete steps to make the system work for you, instead of you working for the system — and isn’t that what the check float was all about?

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