russellj84 wrote:
If you are going to do this just be careful. Do not send any money away until you are sure it clears.
Now seemed like a good time for a reminder to everyone on what banking terms REALLY mean . . .
What "Clear" really means: "The check has cleared" does not mean the money in your account belongs to you. It only means that the clearing house has not sent the draft back for non-sufficient funds, closed account, or flag instructions on the account. It does not mean the draft was written by the account holder.
Depending on the size or purpose of the account, the account holder may not notice the absence of funds for several days after the draft has reached his bank. In fact, an account holder may have up to one full year to report an unauthorized draft.
Bank statements are usually sent out on the 1st or 15th of the month. If the transaction took place near one of those dates, the account holder may be unaware of the unauthorized transaction until statements are sent out the following month and time is taken to balance the statement.
What "Available funds" really means: "Available funds" does not mean the money in your account belongs to you, even if a hold has been taken off the draft.When you deposit a check into your bank account, your bank advances you the money for that check to keep the wheels of commerce moving. Of the millions and millions of checks processed every day, a relatively small number are returned because of a problem; because of this, banks and credit unions must automatically credit depositor accounts within a certain number of days.
A bank or credit union can make an exception to the rule and wait for a longer period of time on any given deposit before crediting the depositor account, but apart from such an exception the credit is automatic.
This credit to your account is called a "provisional loan" and is actually a no-signature loan from your bank to you. It does not mean that your bank has been credited by the account holder bank.
The only time the money in your account really belongs to you is when the check or money order has been HONORED, meaning your bank has been credited (paid) by the account holder bank.
ALWAYS ask your bank if the draft has been
honored and DO NOT TOUCH THE MONEY until it has.
When in doubt about a draft, tell your bank to send the draft for COLLECTION.
Some banks are starting to use the terms "The check is pending" when the money has been deposited into the account, but the check has not yet been honored.
Sending a draft for Collection: When you send a draft for Collection, it means that your bank or credit union will not put any money in your account until the draft has been paid, i.e. your bank has received the credit from the account holder bank.
Your bank or credit union will charge you a fee and give you an approximate time before the draft is honored. This time period may be as long as 6 to 8 weeks depending on the location of the account holder bank.
Some banks and credit unions will provide the collection service even if you do not have an account with them, so long as you pay the service charge.
(Thank you to Annie McGuire from Fraud-Aid for putting banking terms in a way that everyone can understand it.)