Ron Lieber of The New York Times says banks need to step it up in the deposit-crediting space. Despite the passage of Check 21 five years ago, which allows images of checks to carry the same value as the paper checks themselves, outdated laws that regulate how long banks have to credit their customers' accounts after deposits have been made haven't changed.
The result, Lieber says, is that the Federal Reserve and the banks themselves have been slow to change:
Banks are supposed to allow you to withdraw the following types of deposits no later than the next business day after the bank receives them: cash, electronic payments like paychecks and other direct deposits, government checks, postal money orders and cashier's checks. That said, if you don't make the deposits in person (say, if it's through an ATM), there may be further delay.
For other checks, Lieber writes, the Federal Reserve rule that governs deposits makes a distinction between local checks and nonlocal checks. Once a check is deposited, it could go to a Federal Reserve check-processing center before it heads to the bank. If the same center services both banks, then the check is local. If not, it's nonlocal.
And banks get a five days to credit nonlocal checks, despite the fact that the check, if imaged, has likely already cleared — and the bank has gotten paid. But because of electronic check imaging, the Federal Reserve is about a year away from completing the consolidation of all its processing centers. That means many more checks are already local. Unfortunately, a lot of exceptions that allow banks to put a hold on a deposit still exist.
But industry experts argue that banks can and should move beyond the outdated regulations or rules and improve customer service. Some have already pushed their daily deadlines for depositors. Credit unions, in particular, tend to clear deposits more quickly, according to a 2007 Federal Reserve study of the effect of Check 21.
