So, That's How It's Done?

[AtDIelement]

Apparently, I've been doing my job all wrong the entire time! Go figure.

SC: I want to cash this check.
Me: May I see it?
SC: It's just a regular check... It's only for $120,000.
Me: ...?! I'm sorry? There's no way I can cash this check.
SC: Well, why not?
Me: For one, you need the amount in your account to cover it. I don't think that $200 dollars is going to do the job. And two, we don't even carry that much in the bank.
SC: Don't give me that! I know you have it in the vault!
Me: No, actually, we don't. For our security we don't carry nearly that much.
SC: You're lying!
Me: No, I'm really not. I can deposit it and it will be available to you in the next 5 to 7 business days.
SC: But I got bills to pay.
Me: I understand, but unfortunately I can't make it available.
SC: Well, just call *Rival Bank* and get the money from them!
Me: No, I can't do that.
SC: Oh, you're lying again! I know how these banks work, you guys take the checks and get the money, and then bring it back. It's common sense!
Me: Oh, is it?
SC: Don't lie to me on how you do your job! I know that's what you do!
Me: No, it isn't. I can deposit it and it will be available in the time frame I specified.
SC: Fine, whatever, but let me tell you, this is a huge inconvenience!
Me: I apologize.

And of course, as she was leaving she had some choice words she mumbled.

I guess I should have been driving checks back and forth for the past 6 years... I just learned a new way to do my job.... Morons.

[sirwired]

Only for $120,000? In an account with $200? And she wants it in cash? Big checks happen (i.e. after a Real Estate Closing), but who ever needs the whole thing cashed? A few hundred bucks, maybe, but not the whole thing.

When I was a kid, I was fascinated to learn that the gigantic fancy vault was just for Safe Deposit Boxes. It was real disheartening to know that all the actual money was just kept in a closet behind the counter (which I assume had a safe in it.)

[EvilEmpryss]

I would like to know if the check actually cleared.

And I thought that if you wanted to withdraw a large amount of cash from a bank you had to give them a few days' notice so they could acquire the funds without draining their reserves. Forget that the SC wanted to use a check to get the money, and check almost *always* have a hold time to clear.

I am curious, though, about that wait time. If an ATM, POS, and the Bank itself can instantly tell how much money is in my account, why the wait time to cash a check? Can't the bank tell if the money is in the other account instantly (or at least within a day)? This stuff all happens electronically now, not like in the old days when my Mom was a banker and they had to mail the checks between banks to verify the funds were available. I'm not fratching, just asking. Somebody educate me.

[Sapphire Silk]

Also, aren't transactions greater than $10,000 reported to the IRS?

[bankworking]

I am curious, though, about that wait time. If an ATM, POS, and the Bank itself can instantly tell how much money is in my account, why the wait time to cash a check? Can't the bank tell if the money is in the other account instantly (or at least within a day)? This stuff all happens electronically now, not like in the old days when my Mom was a banker and they had to mail the checks between banks to verify the funds were available. I'm not fratching, just asking. Somebody educate me.

Problem is that banks don't use the same processing system as a place like, the ol' Wall of Mart.

My bank takes a check. Check gets scanned in sometime during the day, maybe that night from where the scanned image/account number, etc goes to the local federal reserve branch. If there is ANYTHING off on the batch of checks being scanned, the whole batch gets rejected electronically and ends up having to be re-scanned or sent physically (not sure which because the process has changed). Local federal reserve branch gets the batch of checks and separates them via routing numbers, then sends the appropriate checks on to whatever the federal reserve branch is for the routing number. That federal reserve branch then sends the check images on to the bank that the check is drawn on.

THEN the bank where the check is drawn on must send the funds back to whichever bank cashed the check. So, back up through the federal reserve branches until the funds get to the correct place. (This is why sometimes a check will have cleared out of the account already but the bank that cashes/deposits it doesn't yet know it is cleared.) There is a shortcut for rejected checks that shaves a step off the process, but that's about it.

It's a lot faster than it used to be, but it ain't instantaneous, even being done electronically.

Plus, rather than setting up extensive software to track when each individual check clears individually, banks generally just put a generic hold time on any check they put on hold. The hold time will USUALLY be long enough to catch any checks being rejected, but not always. So even when the funds are "released" it doesn't actually mean the bank has necessarily received the funds for the check in question. I've seen fraudulent checks that come back as fraud a couple of WEEKS after the original deposit (though that is rare).

Vise-versa, sometimes the process does work more quickly and the funds do arrive more quickly than the hold, but the bank simply doesn't bother to track the good checks, only the bad. Cost savings and all. After all, so long as their hold fits within the legal limits, they are in the clear.

[Andara Bledin]

If an ATM, POS, and the Bank itself can instantly tell how much money is in my account, why the wait time to cash a check? Can't the bank tell if the money is in the other account instantly (or at least within a day)?

Check 24 means that all checks are pulled from the originating accounts with 24 hours. Strangely, however, the money isn't available with any degree of alacrity, which makes me wonder just how much banks are earning on that floating money.

I've seen fraudulent checks that come back as fraud a couple of WEEKS after the original deposit (though that is rare).

Most of the returned checks my company gets come back at about 4 days. One that I can recall, however, took just under eight weeks. What the hell took them so long?

THEN the bank where the check is drawn on must send the funds back to whichever bank cashed the check.

I'd be heartily surprised if a lot of money actually went from place to place between banks. I can see some movement, but the bulk of it likely cancels out with only the balance between different banking systems requiring an actual transfer.

And even then, a lot of the money doesn't physically exist to begin with.

^-.-^

[MoonCat]

SC: Fine, whatever, but let me tell you, this is a huge inconvenience!
Me: Yeah, whatever. Please take your scam elsewhere.

Fixed that.

I mean, really. $120,000? She wants it in cash? Did she bring a wheelbarrow to tote the money home in?

[Daemonmonkey]

Here there is a scam when you're trying to sell ex your car through the Internet.

The "customer" often living in another country (This is the Euro Un) tells that he is VERY interested in what ever the seller is selling, and bla bla bla and will even pay 15-20% more than wanted etc. The seller accepts and the scammer then sends a check for an amount 2-5 times bigger than the requested payment, and tells varying stories why they've done this. Then he asks that the seller to cash in, and after all expenses have been payed, to send the remaining back to the buyer.

Of course then after a period the bank returns with a claim towards the seller, which now has to pay back the bank, and on top has lost his wares.

[Marmalady]

It's not just cheques that still take a while to clear.

My ex pays maintenance for our son by a direct debit from his bank. This is taken out of his account on the 17th day of every month. It doesn't appear in mine for about 3 days. And if the 17th is a Friday or Saturday, it will be even longer.

[EvilEmpryss]

Thank you, Bankworking, for the very clear and detailed explanation (and for putting it in laymen's terms).

[Betweenshades]

"would you like that in ones and fives sir and/or ma'am?"

[El Pollo Guerrera]

Reminded me of a tagline from an old movie... "If you're $10,000 in debt, it's your problem... If you're $1,000,000 in debt, it's the banks!"

[bankworking]

Check 24 means that all checks are pulled from the originating accounts with 24 hours. Strangely, however, the money isn't available with any degree of alacrity, which makes me wonder just how much banks are earning on that floating money.

Not as much as they used to before the government put limits on exactly how long the holds could be. Currently, on an established account, check hold releases up to $100 next business day, $4900 in two business days, and only amounts over that $5000 go on the extended 7 business day hold.

Of course, customer service has a great number of low-risk checks, like payroll, available immediately. My bank also doesn't worry about holds on small checks. Even if they are personal checks. Even if the account doesn't have the funds to cover them. Which means, for those checks, the bank is technically lending the money until the check clears. Whenever I'm on the teller line, WAY more of the checks I take are put into instant availability than checks going on hold.

I'd be heartily surprised if a lot of money actually went from place to place between banks. I can see some movement, but the bulk of it likely cancels out with only the balance between different banking systems requiring an actual transfer.

And even then, a lot of the money doesn't physically exist to begin with.

^-.-^

Yeah, money is pretty much all electronic now-a-days. But the electronic transfers still go via the federal reserve branches when they are traveling between different banks. And from what little I've talked with the people who actually handle such at my bank, it really does appear that the money sent and money received is done separately, for accounting reasons, rather than "canceling out". But I'm reaching beyond the scope of my knowledge, so I'll shut up now. *shrug*

[taxguykarl]

So did this check clear or was it a fake?

[Ironclad Alibi]

I'd be heartily surprised if a lot of money actually went from place to place between banks. I can see some movement, but the bulk of it likely cancels out with only the balance between different banking systems requiring an actual transfer.

Gone are the days when the US Treasury issued $100,000 gold certificates (and $500, $1000, $5000 and $10,000 notes) for transferring money between banks. It's all done electronically now.