Check Clearing for the 21st Century: What will it mean to you?

At Vectra Bank Colorado, we wanted to make you aware of a new federal law that will take effect at the end of October. The law is called the Check Clearing for the 21st Century Act, also known as Check 21.  The goal of this law is to "improve the efficiencies of the nation's payment systems."  This law will affect check-writers nationwide.

What is Check 21?
After you write a check, it is transported between many financial institutions by truck or plane before it is finally cleared from your account.  Transportation hours and fees add up.

Check 21 eliminates the need to transport your original check, because it allows printed copies of a digital image of your original check, known as "substitute checks," to be just as legally acceptable as your original check.  Financial institutions can now make a digital copy of your check and electronically send it between financial institutions, saving time and money.

Are all financial institutions required to electronically transfer checks?
No, but some will do so after the law takes effect in October.  That means that checks will continue to be processed faster. If you are used to having a few days between the day you write your check and the day the funds clear your account, be aware that time could be reduced.  To ensure that you will have the necessary funds to clear the checks you write please be aware of your account balances to prevent overdraft.  We also recommend Vectra Bank’s Overdraft Protection on your checking account(s).  It’s simple, just call 1-800-494-1698 and apply over the phone! 

Will Vectra Bank transfer checks electronically?
Yes.  Unlike many banks, Vectra Bank currently provides check images with statements.  The only difference you will notice is the additional image of the “substitute” check, which will be clearly marked.  If the financial institution converts your check to a digital image, they will send the substitute check in its place.  In that case, you will see substitute check images on your statement or online, and if you request a copy of this check, we would send you a copy of the substitute check.

What can I do to help ensure my check payments are processed accurately?
Ordering your checks from Vectra Bank Colorado is more important than ever.  The quality of our checks ensures the best possible digital image and substitute check quality - so your checks are processed with the greatest accuracy.  You can also use "duplicate" checks for an additional way to keep track of your payments. 

Listed below is a list of Frequently Asked Questions to assist you in understanding the new Check 21 law.  If you have any additional questions, please contact our Customer Services department 1-800-232-8948 or stop by any Vectra bank branch.  We look forward to helping you with all your financial needs in the 21st century!

Check 21 - Frequently Asked Questions

Q. What is Check 21?

A. Check 21 is the shortened name for the Check Clearing for the 21st Century Act that will go into effect at the end of October 2004.  It requires all financial institutions to accept substitute check as the legal equivalent of an original check.

Q.   When does Check 21 go into effect?

A.  Check 21 became a law on October 28, 2003, but has an implementation date of October 28, 2004.  To read your rights under the Check 21 law, please click here. (This link will open up a PDF file on your computer. If you are having trouble with this file, you may need to download Adobe Reader to your computer. Adobe Reader is a free download.)

Q. Why was Check 21 passed?

A. In essence, Check 21 brings the check-payment process into the 21st century.  It allows financial institutions to replace the original paper check with an electronic version that can be processed faster and at a cost savings -rather than having to transport, manually process and store the paper check.  Plus, it helps reduce fraud by going through fewer hands.  And if fraud occurs, it can be caught faster, which leads to faster recovery.

Q.  What is a substitute check?

A.  A substitute check is a reproduction or print-out of an original check from a digital image.  Vectra Bank currently includes check images with customer statements.  Now, images of the substitute checks will be included as well.  You may also see substitute check images on your statement or online if the original check wasn't sent to Vectra Bank.

Q. When will I start to feel the effects of Check 21?

A. When you receive your October statement.

Q.   Will Check 21 cost me anything?

A.   No, Check 21 is a law, and it costs nothing to consumers.

Q.   How long after I write a check will it be cleared from my account?

A.  Once Check 21 is implemented, there's no telling how long it will take for your check to be cleared.  Depending on the financial institutions and retailers involved, your check could be cleared almost instantly or within several days. 

Q.  Is this a similar process when retailers give me my check back after I've made a purchase?

A. Yes.  If a retailer gives back your check at the store, your check has been converted to an ACH or Automated Clearing House transaction.  Unlike the Check 21 process, ACH is a system that electronically transfers funds in place of the check.  Under Check 21, an electronic image of the check is transferred and then converted back to paper at the paying bank.  Retailers have been using this system for several years because it helps them to streamline their payment processing and clear funds faster.  On your statement you would see this transaction in a separate area than the rest of your checks.

Q.  What can I do to better manage my account and finances in light of Check 21?

A. If you're used to having a few days between the day you write your check and the day the funds clear your account, be aware that time could be reduced.  If you currently don’t have Overdraft Protection on your checking account, this is a great time to take advantage of this valuable service.  Call 1-800-494-1698 to learn more and set up your account with Vectra Bank’s Overdraft Protection or stop by your local Vectra Bank Branch.  Otherwise, balance your checkbook and maintain your checking records as in the past.  If you have any questions about your accounts, just ask us.  We'd be more than happy to help you!

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