Customer Notifications:
Check 21

What is Check 21?

Check 21 (The Check Clearing Act for the 21st Century) is a new federal law that will go into effect October 28, 2004. It is a means of streamlining the nation's check processing system. Check 21 is intended to reduce the time and cost associated with the physical transportation of checks between banks.

What will Check 21 do?

Check 21 will change the way checks are processed. Currently, financial institutions must provide the original paper check to receive payment. Check 21 will allow all institutions to convert original checks into electronic images or "substitute checks." A substitute check contains the same information as an original check, and it becomes the legal equivalent to the substitute check.

Does Check 21 affect the way I write or accept checks?

No. You will continue to use your current paper checks and accept checks from others. Be sure to use blue or black ink when writing out checks as other inks will not image correctly.

How does Check 21 affect check processing time?

Check 21 accelerates the check collection process by allowing banks to exchange digital image files of original checks. As a result, you will notice a reduction in "float time" (the time between the cashing and clearing of a check). Average float times will continue to decrease over time as more banks convert to substitute checks.

Customers who sometimes rely on "float" to maintain balances will need to be careful to avoid being overdrawn. One way to avoid overdrafts is to monitor your account activity using PlainsCapital Bank's Internet Banking system. In the event that an overdraft occurs, PlainsCapital's Overdraft Privilege service may provide you with the protection you need to avoid costly merchant fees. Contact your PlainsCapital Bank relationship manager for more information.

What happens if there is a discrepancy and I need a copy of a check?

In the event of a discrepancy, retailers and service providers, including financial institutions, are required to accept a substitute check as proof of payment. The substitute check is the legal equivalent of the original and can be obtained from PlainsCapital Bank. To view a sample of a substitute check, click here.

What effect will Check 21 have on my statements?

You will continue to receive images of processed checks just as you do today. However, you may begin to notice a combination of original and substitute check images on your statement.

What if I use Internet Banking to view my paid checks?

You will still be able to view your check images using PlainsCapital Bank's Internet Banking. Images of either the original or substitute check will be available online at no charge.

What happens to my original checks?

Once a digital image is created, your original check is "truncated," or taken out of the collection process. The digital image is exchanged by banks in the collection process and can be used to create a substitute check. The truncated checks are destroyed.

Is it possible to "opt out" of Check 21?

No. Once Check 21 legislation goes into effect on October 28, 2004, it will apply to all bank customers, retailers, and service providers in the United States with no exceptions.

How might Check 21 reduce the risk of fraud?

Processing through electronic channels limits the number of people who have access to your financial information. In addition, electronic processing reduces the time between when a check is written and when it is cancelled, so you may be able to detect forged, altered or unauthorized items sooner.