I assumed online banking checks since they are withdrawn essentially when written, I would never know if they went uncashed or get credited if uncashed. I assumed that the uncashed checks were just part of the profit for the bank for this apparently "free" service. I also assumed that since online banking checks look like junk mail, that many of them went unnoticed into the trash. I got refunded for a check that I cut online in May that my bank called expired since it went uncashed that long.

Am I the only one who was in the dark about what happens to online banking uncashed checks?

Of course a two minute phone call to my bank would have cleared this up.

That's a weird assumption to make.

What would happen if the person never received your check and came to you for payment? Under your assumption that the bank just keeps uncashed checks, you'd be out the money and would have to pay the person again with a second check. That's a silly outcome.

Did you ever bother to reconcile a checking account? It's potentially a lien against the account, but if a check is never cashed, the money doesn't leave the account. Sounds like you haven't been banking very long.

I'd suspect you are alone in thinking that the bank keeps your money if the check isn't cashed.

You owe the debt to whomever you paid and they may come looking for that money. The bank can't keep money that belongs to someone else just because it hasn't been claimed yet.

quote:

Originally posted by tsmccull:
Did you ever bother to reconcile a checking account? It's potentially a lien against the account, but if a check is never cashed, the money doesn't leave the account. Sounds like you haven't been banking very long.

Actually, it sounds like you've never used online banking checks, which is what the OP is talking about.

The money is debited from your available balance when the check is issued by the bank, not when it's cashed by the recipient like a standard check.

They're like cashier's checks in that regard.

quote:

Originally posted by RogueJSK:
The money is debited from your available balance when the check is issued by the bank, not when it's cashed by the recipient like a standard check.

Maybe that is how your bank operates, but not my credit union.

My checking account is not debited until the online check is 'cashed' by the recipient, either physically or electronically (same as a paper check written and mailed by me). So I still get the interest.

Earlier this year I had my credit union send Medicare an online check for a payment. It took Medicare 8 weeks to "cash" it. The whole time that payment money was still in my account, earning interest.

quote:

I also assumed that since online banking checks look like junk mail, that many of them went unnoticed into the trash.

Actually many/most of my online banking checks are electronic fund transfers (EFTs); no physical/paper checks (e.g., payments to credit cards). Some that do get sent via paper check/USPS, like my property taxes, go to the county and I know they aren't going to assume it is junk mail and throw it out. In the very few cases where I have sent an online check to friends/family, I e-mail them to give them a heads-up a rather plain legal envelope is coming with a check.

This message has been edited. Last edited by: 229DAK,

quote:

The money is debited from your available balance when the check is issued by the bank, not when it's cashed by the recipient like a standard check.

^^^^^^^^^
Not my online banking. I discussed the issue with them when they immediately debited the account and the check was cashed 10 days later.I explained that I would not be using the services since the bank was getting the benefit of the float. They agreed to not debit the account until the check was cashed.
You may want to look into the matter.

I guess that's the default for Bank of America billpay checks, then. And sounds like some others too, like ZSMICHAEL's (prior to his specific request) and pbslinger's banks.

And no, I don't need to look into changing it. I actually prefer it. Since my checking account isn't an interest-bearing account, I don't mind the immediate debit like a cashier's check. It's not costing me anything. (And even if it was interest bearing, you'd be looking at a fraction of a percent interest anyway, which on stuff that I use billpay checks for - like a $30 water bill - isn't even one cent.) And it makes keeping up with the account balance significantly simpler, since you're not having to remember to account for the checks that have been issued but not cashed when checking your balance of available funds.

One of the primary benefits to online banking and billpay checks is not having to waste time on balancing a checkbook. Specifically requesting that they set your account to only debit the billpay check upon cashing eliminates that primary benefit, by putting you back at having to keep your own running tally of checks issued vs. checks cashed, and constantly remembering to modify the displayed account balance accordingly.

Issuing a check out from an electronic bank (or with billpay) is like making a purchase with a debit card.

Your available balance drops at the start of the transaction. Your actual balance doesn't change until the recipient's bank accepts the transaction and money changes hands between banks. Until the money leaves your bank and the money changes hands, the money belongs to you.

The OP's assumption is not valid for my banks (USAA and SunTrust). They debit the account when the check is presented for payment/clears, not when it is issued/mailed. And they do not look like junk mail, they look like an ordinary check. One of the first things I did when I started paying bills with the online interface was to send a check to myself so I could see what they look like to a payee. I now hand-write perhaps four or five checks a year out of the checkbook, everything else is paid online, ACH for credit cards, utilities, etc., paper checks mailed by the bank for whatever else.

ooooooooooo - interest for another 3-10 days. Awesome.

At .75% on, say, $500 for 10 days that's almost a dime. WINNING!!! Stickin it to da man!

^^^^^^^^^^^
It is not about the pennies it is the principle.
No one has a colder heart than a banker. They encourage online banking because it saves them money. You can send a Christmas card to your bank if you like thanking them for their wonderful service!!
I used to own shares in a local bank. The amount they make from service charges is quite impressive.

I guess to look at it another way, I'd rather pay my bank those pennies (or more likely fractions of a penny) in lost interest, in exchange for them handling all the checkbook balancing for me.

That fraction of a cent "service charge" (if you want to look at it that way) is money well spent, in my book.

But if you want to pay yourself a penny an hour to hunch over the kitchen table with a checkbook, pen, and calculator out of principle, feel free.

(And that's all assuming you're losing out on interest in the first place. For folks like me whose checking accounts don't earn interest, you're not losing anything. I'm effectively getting that bookkeeping service for "free". And getting a free check, free envelope, and a free stamp out of it to boot. Win-win-win-win.)

^^^^^^^^^^^
My response was not directed at you. Obviously it works for you, and that is good. Banks make money on the service charges and convenience fees. There are more of those if you are running a small business, and they become irritating after a while.

Most banks (apparently not all given the feedback here), treat online banking checks very much like cashiers checks. If you want a cashiers check to pay a vendor, you request the check, the bank removes the money from your account, the money is deposited into the bank's official checks account where it sits until the recipient cashes or deposits the check in their bank and the two banks clear the transaction. Personally, I think this is the best way for these transactions to occur to avoid later overdraft or NSF fees for the account holder when the check eventually clears. And if the check doesn't clear in a specified amount of time, the cashiers check/online banking check is voided and the funds are returned to the original recipient account. In no case does the bank get to 'keep' the proceeds of the check as it is never 'their' money.

I pay a few bills with online banking. My account is never debited until the check is presented for payment. I wouldn’t deal with a bank or CU that took the money out upon issuance of a check. That just doesn’t make sense.