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The Check 21 Act: How checks will be processed

A federal law called "Check Clearing for the 21st Century Act" (Check 21) is designed to increase the efficiency and security of the national check payment system through the use of electronic image technology. This Act went into effect on October 28, 2004. We think it is important for you to know about this process.

One of the biggest impacts of this technology is that checks may clear faster, which means that instead of checks taking 3-4 days to clear - they may clear 1-2 days quicker! Faster clearing of checks is possible because financial institutions can now request payment of a check by sending an electronic image of the check rather than the actual paper check.

When you make a payment by check, it may be handled by several financial institutions before it actually posts to your account. Effective immediately, any financial institution involved in this process may choose to replace your original check with a "substitute check," a copy made from the electronic image of the original check. Check 21 specifies that a "substitute check" will be the legal equivalent of the original check for all purposes, and must be accepted in the same way as the original. You may see a "substitute check" when you view your account information online or request a copy of your original check for proof of payment.

What is a substitute check? A substitute check is a copy of the front and back of the check that becomes the legal equivalent of the original check. To meet the legal requirements set by Check 21 a substitute check must:

  • Bear the legend that states, "This is a legal copy of your check. You can use it the same way you would the original check."
  • Display a MICR line (series of numbers on the bottom of the check that links it to University Credit Union and your account) containing all the information appearing on the bottom of the original check
  • Be suitable for automated processing in the same manner as the original check
View a graphic image of a substitute check.

Check 21 Enhancements and Benefits:

  • Enhanced security and faster detection of fraud
  • Less paper to process and store
  • Reduced vulnerability of the national check processing system to disruption due to weather or other events
  • Faster clearing of payments by check

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Your savings federally insured to at least $250,000 through the National Credit Union Administration (a U.S. Government Agency) and backed by the full faith and credit of the United States Government.
Your savings federally insured to at least $250,000 through the National Credit Union Administration (a U.S. Government Agency) and backed by the full faith and credit of the United States Government.
University Credit Union is an Equal Housing Lender.
University Credit Union is an Equal Housing Lender.

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