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June 24, 2016

Date on your checks have no meaning

Almost all the banks in the US now provide online banking and E-check options to their customers. Writing a real check to pay for services is becoming a thing that your parents used to do. Recently I wrote a check after really really long time, in fact I was lucky to find my check book in the first place. I had to deal with one of the service providers who refused to take any kind of electronic payment for the services they provide.

It was just a check, nothing special. I wrote it and dated it to say, 2/15/2016. Now there is nothing new in there, it’s just a check, I have money in my account and everything is good. Until, I had to help my friend on 2/10/2016 who promised me to pay by 2/14/2016 because I informed him that I have to clear a big amount from my checking account.

Now if I were in India there is nothing wrong in this scenario. My check is dated 2/15/2016 and I will have promised money in my account before 2/14/2016 (I trust my friend) so all good. But, that is not enough with the banks here in the US (not sure about anywhere in the world). My payee deposited check on 2/13/2015 and guess what, my bank (Chase) cleared the check and paid the money which I didn’t have in my account. Of course, they charged extra $35 for having insufficient balance.

So I called my bank hoping to get an explanation on why they cleared my check two days before if the date on check was 2/15/2016? The bank said and “This is between you and the third party. If the check is deposited we will clear it”. They couldn’t give me a satisfactory answer on my argument which was, “If I trust Chase Bank and not the third party with my money, why would the bank honor the check before the date I ask bank to release my money to the third party.”

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