Check Clearing

Question: Is there any way for our credit union to know when checks have cleared other institutions' accounts? Have you ever heard of this possibility? Apparently one of our people learned that there is one bank in our area that does this. If we knew for certain, then we could release our hold on the check when this is confirmed.

Answer: The only real way, at the present time, to know when checks are cleared is to track presentment path, and count the days. For instance, if the bank the check is drawn on is in your local Federal Reserve District, you can be fairly certain that if you haven't gotten it back in four days from day of deposit, it's paid. Of course, you can always make the telephone call to the bank and ask if it's paid. That way you'd know for sure.
For out-of-town (out of your Federal Reserve District) checks, you'd again need to count days. Day one from you to your correspondent, overnight to Fed; day two from your Fed to the out-of-town Fed; day three from Fed to drawee bank; day four to post. By day five you could call the bank and find out if the check had been paid, or if it is being returned. And, of course, it takes as many days to get back as it did to get there.

Check 21 will change all of this. But until we start electronic presentment and return, (starting for some prepared financial institutions October 28) I'm afraid the only way to know if a check is paid so you can release your hold is to call the drawee bank and ask. And, to be truthful, even that's chancy!
I don't know which bank thinks it can "know" when a deposited item has been paid, but I'd be interested in their theory, and where they get their information!

Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 07, 10/04