Bits of Silver

If you use online banking in your business, I want to point out a very interesting circumstance that I have just noticed in the last two weeks.

I often use Bill Pay  to arrange payments from various banks.   I always arrange  in advance for the check to be delivered two days prior to the necessary date to make sure there are no late charges.  In normal times,  this means the check would go out, and when the recepient received it and presented it at their bank, the amount would be taken out of the senders account that night.

Not true any more! 

In the last two weeks I have noticed on several transactions that on the day the check has left the senders Bank,  a debit in now created in the account for the amount.  A check goes to the recipient, but this is a formality so that the vendor is able to deposit the check in their bank to receive the cash. In other words,  the bank has taken the money out of the account on the day the check left, not the day the check was presented to the sender's bank.   I find this very interesting because by the time the check is in the mail,  received at the vendor's, and their entering it into their financial system and bringing it to the bank,  there could be a week in between where the money used to be in the sender's account, but is now in the clearing house's account! Guess who's making money on your money....the clearing house!

When I questioned this the first time I noticed it, the Bank I was speaking to said the clearing house for checks decides how they will handle this.  So there is no absolute rule; just whatever they feel necessary or expedient for them, and the bank has no say.   This seems very suspect to me, but I can tell you it has nothing to do with amounts, because I have seen a $25.00 check debited and a $8000.00 check sent the regular way in the last week that I have been checking in these accounts.

I am bringing this to your attention because if you use online banking, please make sure that there is money to cover these checks when you arrange them.   Do not arrange them thinking you are expecting a large check in the next few days, and by the time the check could get to your bank you will have the money. Your account may be debited when you were not expecting it.  Consider there is zero float at this point and be cautious.

I'm sure this decision has been made because of the recent problems in the economy we have been noticing. And I'm not sure all banks have fallen into this. But I have noticed it with several banks as the clearing houses for these transactions seem to be limited to only several large companies.