When are checks actually deducted from one's checking account?

Jay H

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Background
Say, you have a checking account where you get charged a lousy $10 service charge anytime your account goes below say $1000.
Situation
Say you need to pay off your VISA bill but doing so will drop your account below the magical $1000 limit. However, payday is say in 3 days from now and then you'll have enough to cover the VISA bill. You can't procrastinate on the bill or else you'll pay late fees/interest. If you were to send out the check, when is the check actually debited out of your account, the day the payee cashes it or the date on the check itself? If I sent out the VISA bill knowing that it will take 4-5 days at least to get there and be processed, would I be safe in doing that knowing that I'll get paid in 3 days and my check will clear in about 4 days? Or do the banks use the date on the check and say "HA HA, sucka"

Just wondering if I should post-date the check because of this...
Jay
 

Leila Dougan

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I do know that a lot of collection and credit card companies, etc, don't honor a "post date". They can cash the check once they get it. So, I'm inclined to think they cash the check when they get it, not according to the date on it anyway. You're taking chances, but I've done it a few times myself and have had no problems. Just put the actual date on the check and send it off. Hopefully you'll have already gotten paid before they go to cash it and you'll be fine.
 

Ryan Wright

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when is the check actually debited out of your account, the day the payee cashes it or the date on the check itself?
Neither. Usually, within 3 days of the check being cashed, the money is debited from your account. Depends on what is all involved. If it's a local check going to a local firm it could be debited within 24 hours.

Say I mail you a check on the first of the month. It gets to you on the fifth, and you cash it immediately. You'll get your cash right then and there, but it won't actually be removed from my account for another 2 to 3 days. Thus, my balance will stay the same during this time.

The bank isn't going to look at the date on your check. They're simply going to dispurse the funds when they get the request from the bank that cashed your check.

Hope this helps.
 

Todd Hochard

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Say, you have a checking account where you get charged a lousy $10 service charge anytime your account goes below say $1000.
2nd the credit union suggestion. Washington Mutual also does the no fee thing around here.
Simply put, the check clears when it clears. The date is irrelevant. If you mail off to VISA, and they get the check in 3 days, expect it to clear a day or two after that.
 

Danny R

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when is the check actually debited out of your account, the day the payee cashes it or the date on the check itself? If I sent out the VISA bill knowing that it will take 4-5 days at least to get there and be processed, would I be safe in doing that knowing that I'll get paid in 3 days and my check will clear in about 4 days? Or do the banks use the date on the check and say "HA HA, sucka"
If you know it takes 4 days for the credit card company to get the check, and you get paid in 3 days, then you are fine. The check will pass through your account when they get notice from the feds that a check was issued. The actual date on the check or the date the company received it is meaningless.
Banking 101: When you write a check, the company first has to process it to credit your account, update their own records etc. Often this may take a day. Then they send it on to a bank for deposit.
With credit card companies, the company itself IS a bank, so that step is combined into one step.
The bank then runs it through a machine that sends the info to the federal reserve, which handles the intrabank processing, automatically moving funds to and from banks.
This step is eliminated if the bank that processes the check is the bank that the check is drawn from. This is why local checks can be cashed faster than out of state checks, because the bank the payee does business with might be the same bank you check from.
Now for the legal stuff: writing a check which you know you don't have funds for is illegal.
 

Malcolm R

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Like they said about credit unions, or any bank with free checking. I have free checking from my local bank plus they pay me interest just because I have my paycheck deposited electronically.

"Post dating" a check is a myth. Banks/creditors don't care what the date is; they'll cash it upon receipt regardless and your bank will honor it.

And I'd be careful about assuming how many days it will take checks to clear. In the past few years, it seems to have become less and less. I've sent payments out of state that were charged back to my account in only 3 days. Some in-state payments are only 2 days.
 

Chris Knox

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My current girlfriend works at a local bank here and has an unbelievable system for floating a check for years!!!

Understand that you have to know how each individual business treats their books. Writing a check at your local Wal-Mart might take four days for it to clear. However, right next door at TGI Fridays might take a week. Your local mom and pop hardware store might take a day.

She (my girlfriend) has ONE system where if she's tight on cash and a week before payday, she can write a check at, say Wal-mart. Then in three days go back to walmart and write another check for something else and becuase Wal-Mart will allow you to write a check over up to 25.00, she writes it over 25.00 and deposits the cash she gets into her account at work the next day.

That money catches the old incoming check and the other check doesn't arrive for an additional 4 days!!! Her pay day covers that one!


Boy, she'd be a mob accountant if they only knew some of her skills!
 

Jay H

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Thanks for the info, I thought that was the case but wasn't sure.

On a similar note, I've had this checking account since I was a freshman in college and I'm too lazy to change it, it's never really a problem keeping 1k in the bank, just that after paying the DMV NJ sales tax on a car, I know that it's would dip below $1k for a short bit. Not enough to overdraw my account but enough for a service charge.

I've actually had a problem with a paycheck last year, because of our workschedule, we had a friday off that would normally be a payday, so our company gave us our paychecks on the thursday before the weekend.. However, the checks were still dated for Friday and I couldn't get any cash back from that check when I tried to deposit it into my account that same day because the date was in the future (the next day).

Jay
 

CameronJ

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She (my girlfriend) has ONE system where if she's tight on cash and a week before payday, she can write a check at, say Wal-mart. Then in three days go back to walmart and write another check for something else and becuase Wal-Mart will allow you to write a check over up to 25.00, she writes it over 25.00 and deposits the cash she gets into her account at work the next day.
Chris,
Your girlfriend should be VERY careful doing this. This practice is known as "kiting" and is technically fraud, as she is writing a check when she knows that she does not have the funds to cover the check right now.
Additionally, most banks have an internal audit department that performs periodic (usually annually) reviews of an employee's account. They are generally looking for fraud (large deposits, etc.) however they do focus on cash deposits as well. If this gets caught, she will most likely be fired.
 

Chris Lock

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> Writing a check at your local Wal-Mart might take four days for it to clear.

And using a credit card gives you up to several weeks to pay, with no fear of bouncing a check.
 

Ryan Wright

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Additionally, most banks have an internal audit department that performs periodic (usually annually) reviews of an employee's account. They are generally looking for fraud (large deposits, etc.) however they do focus on cash deposits as well. If this gets caught, she will most likely be fired.
How exactly would she be fired? She's not screwing with the bank's systems. She simply understands how banks work and is floating checks here and there the same as anyone else. I find it hard to believe a bank would fire an employee based on the way she pays her bills.

I can see where this could eventually bite someone in the ass, where a check hits the account sooner than expected. Even then, the worst that could happen is you get hit with a $30-$50 NSF charge, you pay it and the original debt (because by then you've received your paycheck), and everyone is happy. This could get expensive if you did it on a regular basis, though, and if you didn't take care of the debt and the NSF charge you could be in a lot of trouble.
 

Nathan*W

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How exactly would she be fired? She's not screwing with the bank's systems. She simply understands how banks work and is floating checks here and there the same as anyone else. I find it hard to believe a bank would fire an employee based on the way she pays her bills.
Because banks have rules and standards that they hold employees to. Regardless of whether she actually bounces the checks she writes, the process is still kiting and illegal. As far as bank management is concerned:

Illegal banking practices = fired
 

Jay H

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So why are you worried about a teeny, tiny $10 fee?
It's not that I'm worried, it's just something that I try to avoid as much as possible. Service fees, sales tax, all add up after awhile. After paying 6% sales tax on a new car purchase and also part of the car was purchased on my credit card (so I can get Sony points), my checking account took a major hit this pass month so that's the only reason, I'm flirting with
 

CameronJ

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How exactly would she be fired?
Ryan,

My guess is that her supervisor would sit her down, explain that as a condition of her employment she agreed to follow all the bank's rules to the letter. She would then be fired.

There's a difference between 'floating' and 'kiting'. Floating, while technically frowned upon, is in reality a normal practice for millions of bank customers.

If you read the description of the transactions, you'll see that she's not "paying bills." She's intentionally writing a check for cash (that she doesn't currently have) to cover another check (that she didn't have the funds to cover when she wrote it). This is check kiting. Check kiting is fraud. To paraphrase Nathan, fraud gets you fired.

And yes, banks do fire people for this exact behavior. It's quite possible that an employee may get a stern warning and a second chance, but their account will be heavily scrutinized after that.
 

MikeAlletto

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People still write checks? I charge everything then have my credit cards payment paid online right out of my checking account. I never carry a credit card balance so I never get hit with interest. Its like a $1000 or so interest free loan each month that I don't have to pay till the next month. I think the only check I write now is rent.
 

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