| Every year nearly 60,000 airplanes take off and land | | | | bounced check service fee. |
| with anestimated 36 billion paper checks at an annual | | | | Who is more likely to have insufficient funds in their |
| processing cost of $8billion. Who pays this $8 billion | | | | checkingaccount - the above average income or the |
| dollars? The banks and creditunions across the nation, | | | | below average incomeconsumers? |
| that's who. Why do they go to all thiseffort and | | | | I guess it depends on your definition of below |
| expense? Many state commercial codes stipulated | | | | average income. Theultra-below make less than |
| that onlya canceled check was proof positive of | | | | $10,000 a year and mostly operate withoutchecking |
| payment. | | | | accounts. The ultra-above make more than $250,000 |
| Since there are nearly 18,000 financial institutions in | | | | and useelectronic or plastic means of paying for their |
| the United | | | | purchases andeveryday expenses. |
| States, most of them have not been able to charge | | | | That leaves the rest of the nation, approximately |
| fees to cover this | | | | 200,000,000 of usto provide enough service fees for |
| $8 billion cost of letting you have a checking account. | | | | the banks to average a quartermillion dollars in |
| This meansthat all of that money has to come out | | | | unearned income each year. We're the peoplewriting |
| of other fees, penalties andloan rates. | | | | 10 checks every month for every member of our |
| At least this was the truth until October 21, 2004 | | | | household. |
| when a newfederal law took effect trumping states | | | | We're the busy parents of active children trying to |
| rights to regulate bankswithin their borders. The | | | | do everything andbe everything in what we call an |
| Check 21 Act allows a paper preprint of acheck to | | | | American dream. |
| be considered the equivalent of the original check. In | | | | How can you protect yourself and keep from adding |
| English this means a bank in Oregon can copy a | | | | to your banksbottom line? Control your checkbook |
| deposited check, sendthe image to your bank via | | | | and perhaps even change yourspending habits. As |
| electronic means and receive their moneyall in the | | | | more and more banks switch to the Check |
| same day. | | | | 21system, you have to be ready for when it |
| Image exchange checks will not replace the old | | | | happens to you. |
| fashioned method ofmoving paper checks any time | | | | You can do this in a very simple, practical, and easy |
| soon, though the number of checkswritten a year is | | | | manner. Flip-flop the order of writing checks. Let me |
| decreasing an estimated 5%. Analysts expect | | | | demonstrate on Sue, atypical mother of two children |
| theimage exchange checks to surpass paper | | | | (12 & 14) who works at a local officebuilding. |
| processing in 2006. | | | | Every Friday her weekly paycheck is deposited in |
| So why do banks want to invest in the equipment | | | | herchecking account electronically. |
| and securitymeasures necessary to move checks | | | | How Sue will respond to Check 21 is that from now |
| electronically when the othermethod works? I can | | | | on she will nolonger do the grocery shopping on |
| name you 5 reasons for every check everyfinancial | | | | Thursday after soccer practice. |
| institution handles and they are all named Lincoln. | | | | Instead she will wait until Saturday after gymnastics, |
| Everycheck a bank does not handle is a savings of 5 | | | | or even Mondayon her way home from work to |
| cents, for an annualaverage savings, per bank, per | | | | swing by the store and pickup a couplebags groceries |
| year, of $266,000. | | | | for the week. By making this switch in routine, shewill |
| How will this affect you, the consumer, who writes | | | | know the money for the groceries is in the bank. |
| 120 checks a yearfor every man, woman, and child in | | | | Now let's make the assumption that instead of some |
| this country? It doesn't affectyou very much, except | | | | imaginary womannamed Sue, this person was you. |
| you will likely be receiving a printout of yourchecks | | | | Did you see what happened? Instead ofwriting a |
| with every statement. | | | | check before the money was in your account, you |
| The exception to this is if you are one of the millions | | | | waited towrite the check after the money was in |
| of consumerswho will write a check on Thursday, | | | | available. This guaranteedyour check would clear and |
| the day before your paycheck isdeposited. You have | | | | you would not be charged any unexpectedservice |
| become accustomed to writing a check and having | | | | fees. |
| acouple days to get the money into the account | | | | By waiting to write checks until after the funds are in |
| before the checkreaches your bank. You are using | | | | the accountwill take a little practice on your part and |
| what is called the float principle. | | | | might be more difficultto do than it sounds. If you |
| Simply put, the float principle is the amount of time it | | | | make the effort, and train yourself tothink like a |
| takes acheck to be deposited, trucked and flown to | | | | banker so you can avoid service fees, you will come |
| your bank. | | | | outmoney ahead. |
| With image exchange, the float is sunk. Through | | | | As the rules of banking change, you have to know |
| 2006 the banks andcredit unions can collect an | | | | and understand yourrights and what these rule |
| estimated $170 million per month inbounced check | | | | changes mean to you. Check 21 legislationwas |
| fees on nearly 7 million checks written on | | | | enacted to make check processing easier and more |
| accountsbefore the money was in the account. | | | | convenient forfinancial institutions across the country. |
| That $170 million translates into 5 cents for every | | | | They are also anticipatinga surge in income through |
| check written inthe nation, or nearly $266,000 per | | | | service fees. Do your best to avoid paddingtheir |
| bank, per year. This money will betaken from | | | | bottom line - write checks only after the money is in |
| consumers in the form of "service fees", turning that | | | | youraccount. |
| $35check into a $70 check because of the $35 | | | | |