It seems like a quaint notion, like rabbit-ear TVs or family-owned department stores. But unlike those relics, the fine art of floating a check to delay payment isn’t dead, it’s just changed form. Here are three moves you can make to revive the spirit of the float, even in the midst of the digital age.
First, the back story. Floating checks used to be a time-honored tradition. essentially you cut a paper check and get quick credit for payment, even though it might take the bank five days to pull the money out of your checking account.
But banks and creditors got wise, and lobbied Congress hard to change the rules. That’s one reason why, in 2003, we got the Check Clearing for the 21st Century Act (more commonly known as “Check 21”). The legislation enabled banks to use electronic versions of checks to pass checks through the system more quickly and more efficiently. In the process, float times were cut significantly. Now it’s common for a check to be “cleared” within a day of the bank receiving it.
But you can fight back and beat Check 21 in a variety of ways. Let’s examine the best ones.
Get direct deposit. A business owner who uses bank wire transfers to get paid knows the value of direct deposit. Now employees can easily get in on the action. With direct deposit, instead of waiting for your employer to cut you a check, then wait even more while you schlep the check down to your bank for deposit and wait a few days for it to clear, you get access to the money almost immediately. That should shave a few days off the time you have to wait for access to your pay.