This is true for banks, but credit unions are a bit more customer-oriented. Mine makes funds from a deposited check available on the same day at a teller, or next day from an ATM. I’m sure there are some checks that they red flag, but for reasonable amounts on US checks I’ve never had a problem.
Much about Bank security is confidential, but I can tell you:
It is not that easy, if it was easy, then it’d be common. Trust me, anything people can think up on a message board can be thought up by crooks.
It is not a issue. I have never seen either of those issues in a decade of working bank fraud and anti-money laundering. True, I generally only got the big dollar cases.
Credit unions are owned by the customers, so they are definitely more customer oriented.
That’s an interesting definition of “benefit”. That is a very dangerous practice. Sometimes people deposit checks right away.
Those are expensive. Furthermore people keep getting SWIFT numbers wrong. It’s easy to check this information on Google, but I suspect most people don’t do wire transfers often (if at all) and so it’s easy to make a mistake.
IME they cost about $35, and compared to the inconvenience @Chronos experienced by not having any of his funds for a month, that seems a small price to pay. Also, since the transfer would have been handled by bank representatives, the possibility of an error was small.
Whether it’s a “very dangerous practice” or not depends on the specifics- if I mail a check today (when there aren’t enough funds in my account to cover it) knowing that my paycheck will hit my account tomorrow morning , there’s no way that the check will be delivered and deposited before the money is in the account. Unless something goes wrong with my direct deposit - which has been a day late once in 26 years.
The “float” is the time it takes for the check to get to the recipient by mail, 2 or 3 days or more depending on a variety of factors, it is not based on the recipient delaying their deposit. If I handed someone a check in person, I would of course need to have the funds in the bank to cover it. Electronic banking has made this pretty much obsolete as a tactic.
And yes, it could be a benefit to the check writer if they were living from paycheck to paycheck and they had a postmark deadline for a payment. It could buy them a precious couple of days. Perhaps you have never had to live like that.
Back when I still accepted checks at work, I would sometimes take a deposit to the bank and have one of the checks bounce. Then I’d have the person who wrote the check blaming me for running right to the bank instead of waiting a few days.
I think the float is the amount of time it takes for a cheque to clear. Cheque kiting relies on that.
I lived paycheque to paycheque for nine years. I wrote a few cheques, but I never tried something like this. I didn’t have to mail cheques on a regular basis; I only recall having to do so twice.
I would call writing a cheque when you don’t have the money in the account yet risky. You’re relying on factors outside of your control.
It used to be Monday was payday, so after 5pm on Friday you were free to write any check you wanted because it wasn’t getting anywhere until Monday, after you have been paid. This worked out good for groceries several times.
When our (large) company was looking at getting off the IBM mainframe, we found a source for magnetic ink laser cartridges so you could print those computer font routing numbers on cheques with a laser printer. Frank Abagnale ( Catch Me If You Can ) printed his own cheques and the tech has gotten easier since then. Yes, a minimum wage clerk isn’t going to print their own cheques, but like credit card harvesting or shoulder surfing your pin code, they are usually put up to it by a larger organization.
(I got a call from Amex once saying they were issuing me a new card/number due to fraudulent activity. Someone used my card to buy a ticket from Manila to Hong Kong. Probably due to use in a New Jersey restaurant?)
The thing with cheques is “trust”. 99% of cheques, in the good old days, were legit. Therefore, it was a simple form of payment, and 99% of transactions happened just fine. That’s why you can cash a cheque today using a picture - they have a level of trust in you that they feel it’s a convenient service and unlikely to cause problems. I don’t know what smarts they use to validate the cheque at the cashing bank and the bank its drawn on… I wouldn’t be surprised if it’s simply “see if the account holder complains”, and possibly, like credit card fraud detection, some computerized pattern checks - unusually large amounts or to suspicious locations get flagged for human verification.
I had a friend back in the early 90s who was an expert at this. The thing is that ‘sometimes people deposit checks right away’ was almost never true back then, because they were usually dealing with taking a bunch of paper checks to a bank, who would then send the checks for people to process by hand. So it would virtually always take a few days for the check to actually make it’s way to a bank and hit a bank account, and you could stretch this out more by accounting for people’s patterns, and know when it wouldn’t work by accounting for their interest in the check. If you delivered a check to the admissions office at 4:45 on Friday, they weren’t going to deposit it that night or over the weekend, and pretty likely it was going to be the middle of the next week before it actually hit a bank since it would need to migrate to several people. Meanwhile you couldn’t use this when buying a car outright, because the dealer would be motivated to call the bank and make sure the check would clear before giving you the keys.
It’s completely different today because all of the pieces move faster. An individual can deposit a check from their cell phone without even going to a bank, and the bank will send the charge to the account it’s drawn on almost instantly. Businesses like grocery stores can have check scanning so that they instantly know if there’s an NSF condition, and the check is deposited before you can even get your groceries in the car.
Yes, a minimum wage clerk isn’t going to print their own cheques, but like credit card harvesting or shoulder surfing your pin code, they are usually put up to it by a larger organization.
Yes, in the old days this occured, but by “old days” I mean before the 21st century. Now it’s cashiers checks.
Note also, that if this did happen, or if your checkbook gets stolen- your checks are not valid unless signed by you. True, they could cause havoc for a while, but in the end, you wont be out the $$.
I’ve paid for a lot of things online using no other information than my name, the name of my bank, my checking account number, and the routing number. All of which is on any check.
^^Same with me, mainly my monthly electric bill, twice a year car insurance, and yearly life insurance.
On the side question of “who uses checks, why not electronic transfers or direct deposit?”:
We should keep in mind that a significant fraction of the US population does not have a bank account at all, and relies on alternative banking (check cashing stores for, uh, check cashing; pawnshops, loan sharks, etc. for credit). If you’re paying one of those people, it’s cash or check. Or barter, I guess.
(According to Wikipedia, the Fed estimates the unbanked and underbanked population at 22 percent of US households — 55 million people. Apparently, “underbanked” means you don’t have a traditional bank account, but use alternative banking.)
I will, in passing, note the similarity to the widely held assumption that “everyone” has a photo ID.
Yeah, the aggressive garnishment of bank accounts and paychecks helps keep a decent amount of people in the underbanked category, that definitely helps contribute to the large shadow banking system in the USA.
In my smallish Town, we used to have three or four cheque cashing shops. They are all gone now, presumably due to lack of demand. Banks are legally obliged to offer free accounts, regardless of credit history. Of course they are limited _ no overdraft for example, but users do get an ATM card so that they can draw cash if they need it… Few drug dealers take payment by card, even these days.
Interesting. In Europe checks are used very little, even in the UK. It’s electronic direct debit or bank transfer these days, even credit cards get used less. Some places like Sweden are even trying to go cashless. The USA sounds like it is a bit behind the times in this respect, but then there are people over here as well who don’t and won’t have bank accounts and just use cash.
While this this doesn’t pertain to the OP’s situation exactly, if you happen to have more than one bank account, and for certain situations, writing a check to yourself may still be the fastest way to transfer money from one bank to the other. You draw the check on the account from which you want to transfer the money, then you use the other bank’s smartphone app to do a remote deposit, and boom! the check is deposited and cleared instantly. Whereas, if you go to the bank’s website and use the transfer tool there, it might take a couple of days to clear.