Check 21

Check 21 is a new law that allows credit unions & banks to ‘truncate’ checks earlier

the check clearing process and more often. It also allows all U.S. financial

institutions to

start the process of substituting paper checks

With

electronic checks

at any point during

the check collection process.

What is truncation?

Truncation means to remove an original paper check from the check process, and in

its

place make a substitute electronic check. In other words, truncation means you

do not

receive the actual cancelled check back

With

your monthly statements.

Because credit

unions have been truncating checks for several decades, you will

see minimal changes.

One change you may notice, however, is that if you request a

copy of one of your

cleared checks, you may actually receive an Image Replacement

Document, or IRD (an

electronic check equivalent), which will carry all the

information of your original check.

What are the main effects of Check 21 to me?

You won’t be able to get your original paper checks back, because your financial

institution will no longer have them.

Checks you write will clear sooner, increasing

the risk that a check will bounce if funds are not in the account when

the check is first written. You may not get access to the funds from checks you

deposit any sooner, because the

new law does not shorten check hold times.

Why is Check 21 important?

Check 21 will provide savings by allowing financial institutions to substitute paper checks

With

an electronic

equivalent sooner and more often during the check clearing process. Additional costs savings are realized because

financial institutions can eliminate the handling, manual processing and storage of paper checks. In addition, Check

21 allows for faster collection and return of checks, which can help mitigate check fraud. It also reduces check

clearing time, which provides you

With

greater control over your account and personal finances.

Will I be able to get a copy of a cancelled check if I need one?

Yes. However, as mentioned above, the cancelled check may actually be an electronic check substitute of your

check.

Will this substitute copy be legal?

Yes. A substitute check is the legal equivalent of its original check for all purposes, if it meets all specified

requirements. This substitute check can be used in the same legal manner as if it was your original cancelled paper

check.

Is there anything I should do differently

With

regard to my credit union checking account?

No. Accurately maintain your checking account records and reconcile your statements timely, as you have in the

past. As always, if you have any questions about your accounts, please call or stop in to see us– we would be

happy to assist you.

With the Federal Fair Housing
Opportunity Act.