Check 21 / CCAF Act
The Float has sunk
Check 21 and the Consumer
Checking Account Fairness (CCAF) Act
The Float Has Sunk
Near the end of 2004, the Check Clearing for the 21st Century Act (Check 21) went into effect, bringing with it mixed opinions on what consumers and bankers alike could expect. The now law dealt with the exchange of digitized checks opposed to physical checks, and decreased processing time drastically. The belief among many circles was that checks would begin to bounce en masse, and that the consumer would be impacted in a drastic way. This paper touches on the underlying subject of the "float" as well as subsequent legislation entitled the Consumer Checking Account Fairness Act (CCAF) that addresses imperfections in Check 21. We will offer information on both acts and show how we as the consumer can expect to be affected.
The Float
Ventureline.com defines the term "float" as being "the time between the deposit of checks in a bank and when the amount is truly accessible" (2005). This term, although unfamiliar to some, represents a time honored practice that virtually everyone, of any age, has become familiar with. With respect to our personal finances, a float is used to buy the consumer time before funds must be withdrawn from an account. It is advantageous to use from the standpoint of cash flow, as funds might not be available immediately to cover a check, but are expected. This gives the consumer a small amount of leeway in writing checks, as the float may afford the consumer several days before they must cover a check. In a business setting, things are a bit different. There are still advantages that can be realized from a cash flow standpoint, however the float is more of a tool than a resource for the b ...