Say goodbye to the days when writing a check at the grocery store meant you had a few days before the funds disappeared from your account.
Beginning today, merchants can start using a new method to electronically clear your checks. It's called back-office conversion, and it lets merchants convert your checks from paper to an electronic debit and clear them through the same network used to directly deposit your paycheck into your account.
This is good news for retailers because they won't have to cart your paper checks to the bank anymore. But it's bad news for you because you'll see your checks clearing faster -- which not only costs you some interest but also takes away a couple days of lag time to make sure that your check account isn't dwindling perilously close to empty.
This change may come as no surprise, as many money transactions have been converting to faster, electronic transfers. It might catch you unaware, though, if your favorite merchant suddenly starts clearing your checks much more quickly.
If you pay attention, you'll be able to anticipate the change. The Washington Post reported that merchants must tell their customers that they're adopting back-office conversion and turning your paper checks into electronic payments. You'll find the notice at the register and on your receipts. For bills that come in the mail, you'll find the disclosure on your statement or in a separate enclosure.
When you see the transaction on your monthly bank statement, it will note the check number, the date, the amount, and the payee. (Good for those of us who occasionally forget to record a check or two in the register.) If you can't find a transaction on your checking statement, look among your electronic funds transfers, like your ATM withdrawals.
Consumers can also opt out of the back-office conversion process, but you'll have to ask the retailer or merchant how to do so. According to information for consumers assembled by the Electronic Payments Network and NACHA, the Electronic Payments Association, you've authorized the electronic conversion if you write a check after the merchant or retailer has notified you of the change. The groups also said it's up to the merchant to safely store your check until it can be destroyed.
Of course, you may already regard checks as hopelessly old-fashioned and never pay with anything but debit or credit cards. But for anyone who still relies on traditional paper checks, this could mean much faster transactions than usual and gives you another good reason to make sure you keep your checkbook balanced.
Get more information about the basics of banking from the Banking Center and these related articles:
- How Big Is Your Checking Account?
- Is Your Money in a Stupid Place?
- What's a Bank Really For?
- Common Banking Mistakes