Check 21

On October 28, 2003, President Bush signed into law The Check Clearing for the 21st Century Act (Check 21).  This Act becomes effective October 28, 2004.  The Act was presented to our lawmakers by the Federal Reserve System, who since 2000 had been investigating a way of improving the check payment system and make check processing faster.  Check 21 uses a new negotiable instrument, or “Substitute Check,” which is a reproduction of the original check that contains an image of the front and back of the original check, bears the MICR line of the original check and is suitable for automated processing.  If the substitute check meets the Act’s requirements, it is the legal equivalent of the original paper check.

Substitute Checks are processed electronically, checks you write today may appear for payment to your account in today’s share draft file at the credit union.  With the possibility of your checks clearing so quickly, deposits to your account must be made before you write checks to avoid overdraft protection fees and insufficient fund fees.

Anytime after October 28, you may receive a copy of a substitute check when you request a copy of a paid check from the credit union or as a deposited check that has been returned unpaid.  You may also see a substitute check instead of the original check when viewing check images via online banking.