I’m selling a bike to a guy in California, but after a rediculous 12 day mail delay (damn you, CU Mail Room!) I finally have the first half of the purchase price in my hand.
So, when I watch my US Bank account online, once the deposit no longer says “pending” or “deposit funds withheld” or whatnot, that check has effectively cleared, correct? It’s not just my bank being generous, they have no more recourse for going back and saying that the buyer’s account didn’t have the funds to cover it, do they?
I wouldn’t bet on it. I’ve heard stories of people depositing counterfeit cashier’s checks, having them clear, then the bank takes back the money weeks later, when they discover that the check is bogus.
My understanding is that banks are required to make funds available within a certain time after the deposit is made, irrespective of whether said funds have actually been received by the bank and the transaction finalized on their end. However, the depositer is the one responsible for these funds. If and when the deposited item is found to be fraudulent, the bank will charge the account for the deposited amount. So until the transaction is finalized in all respects, the bank is essentially lending you the deposited amount, and if they don’t actually get the money, you have to pay it back.
This process can sometimes take weeks. If you want to be certain that the funds are yours to keep, contact your bank and get the details on the particular transaction.
Really? Do you still use cheques for anything? The hassle of getting a money order would be a drag when you want to send in a utility payment or pay your rent.
There’s actually so much fraud being done with money orders and cashiers checks, I’d just as soon take a personal check.
It’s trivial for anyone to dink up a very official-looking check from a non-existent bank on their home PC, or even buy a real cashiers check, then alter it.
Back in South Africa I didn’t even have a check book. Institutions (such as your car finance company or your mobile phone provider) would typically have debit orders on your bank account. It works pretty well, although I much prefer being the one who instigates the payment. It was also easy to transfer money to other people’s bank accounts through internet banking. So I transferred my rent directly to the bank account of the rental company, and my flatmate transferred his portion directly into my bank account. It is not so easy to do that in the US.
I only write one check a month in the US, and that is to my apartment complex. All other payments, including utilities, have websites where I can initiate payments every month.
Back to the OP. It’s a two-step process. First your bank confirms electronically that the account on which the check is drawn has the funds. Then, depending on the bank, the size of the check and how long you’ve been a customer, the bank makes all or part of the deposit to you. The check continues through channels for processing, which can take a couple weeks. If the check ultimately is dishonored for any reason, it gets charged back to your account and you have to pay the bank back if you’ve spent the money. If, in the meantime, you’ve shipped the bike, you’re out both the bike and the money. Ways to avoid this problem include money orders (as mentioned), cashier’s checks and certified checks. So, that (or cash) is what you should require on delivery, which I assume is when you get the other half of the purchase price.
I’m describing what generally happens. If you want to be certain how your bank prcoesses these things, call them. They’ll be happy to explain.
It has basically been said but I’ll restate, the bank does have recourse on your account no matter the length of time. In-state hold time will be 2 days while out of state will be 5 days. They must make the first $100 available to you. Usually if you are a good customer of the bank(account open over 6 months with no overdrafts) and the check is not exceptionally large, they will provide a float. You will be given credit for the check before funds are collected.
Depending on the amount, need for funds and your suspicion level, a wire transfer is probably a much better idea for out of state payments. The sender will have to pay a small fee but the money is there within one business day.
wow.
down here in Katrinaland we are learning about this because of all the insurance and contractors checks being improperly deposited. I am told the hold time is “up to 15 days”. So if I deposit a check in my account I can never count on it being good? That isn’t a comforting thought. OTOH, I would think that the bank would have some explaining to do if it took them 8 months to determine that a check is bogus.
In general, if the check is written with a bank that has a branch near you, I would think that you would be safe if you go cash that check at the bank on which the check is written. Then take the cash and deposit it in your account.
I’m not saying that this is a bad idea, assuming that the bank will give you the information. Your call might avoid NSF and similar problems.
But a phone call can’t (completely) verify if it is a valid check. What if it’s a stolen blank check, or computer recreation, with a forged signature? The account might have plenty of funds, but the check is still bad.
In most states (perhaps all - it’s a UCC limitation), certain check-related claims can be made up to 3 years after the initial transaction.
So “ring[ing] the bank” is not the complete solution that you think it is.
Maybe American banks are different than Australian.But in Australia one can phone the bank and (completely) verify a bank or cashier’s cheque. Maybe you are saying that one cannot verify a personal cheque-that is correct.
Chase has this restriction clearly spelled out in their account agreement. It only applies to accounts open less than 30 days. But even after that, there is a significant delay.
The problem around here is that people are receiving insurance checks for many thousands of $. They are made out to both the homeowner and the mortgage company. The mortgage company insists on holding the money and only paying when an invoice from the contractor/supplier is presented. The idea is to protect the value of the property. Homeowners don’t like this. So they forge the mortgage company signature, after all the check is going back to the insurance company not the mortgage company, and deposit the check. Apparently the canceled checks are being routed by the mortgage companies to confirm the endorcement.