| The new federal law,
Check Clearing for the 21st Century Act, commonly referred to as Check 21, will
go into effect on October 28, 2004. This law allows for a printed check image to
carry the same legal standing as an original paper check. It encourages banks to
exchange images instead of paper, reducing or eliminating sorting,
transportation, and delayed posting costs, and will be the most expansive
technology overhaul the banking industry has experienced in the past 30 years.
How will it work? After a check's image is captured at the
financial institution at which it was negotiated, the image will be transmitted
quickly to another bank over a secure, managed network, shortening the
traditional clearing and settlement process, giving immediate credit to the
customer. Simply stated, Check 21 will do for checks what email did for letter
writing.
First National Bank has opted not to convert items negotiated
with us into electronic image files at this time, but other financial
institutions processing an item drawn on your account with us may convert your
check to an image file for processing. In this case, this new system will affect
you, and we will work to help you to adjust to those changes.
Here are some answers to questions you might have ...
Q: Will the substitute check look just like the original?
A: It may not be the same size and it may not look like the check you
originally wrote,
but you'll be able to use it to prove that the check was written and cleared
through the system.
Q: What will happen to my original check?
A: The institution that converts your check to an electronic transaction
may destroy the check. That is why some of your original checks will not show up
along with your statement.
Q: Will I be charged extra for this electronic check conversion?
A: No, there will be no additional charges for the electronic processing
of your check.
In fact, the process will allow checks to clear more quickly, reducing fraud.
Q: What if I need a copy of my check?
A: You will be able to receive a special kind of copy of the check called
a "substitute check". The substitute check will be treated the same as
the original under state and federal law.
Q: If the check clears more quickly, will I get my money sooner?
A: Yes. The actual funds will make their way through the system more
quickly and it may reduce the time that you'll wait for checks to clear, but
holds may still apply to certain deposited items.
Q: What happens if I deposit a check into my account to cover checks
that I've already written?
A: Deposits should be made before checks are written. With the checks
clearing more quickly, you'll need to make sure that you have a high enough
balance in your account to cover any checks you write. Depositing funds to cover
already-written checks may result in overdraft charges if the deposited funds
are not available before your checks clear.
Watch your bank statement for more information about Check 21 and how it will
affect you.
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