Bank of America May be Keeping Your Money
As of June 22nd of this year, if you were formerly a Fleet Bank personal checking account customer who used online banking, your ability to write “personal checks” was taken from you by Bank of America and replaced by something quite different.
When you write someone a personal check, the money stays in your account until the check is presented to the bank for payment, at which time the funds are transferred from your account to the recipient’s account or to cash. If you send your nephew Jimmy a birthday card with a personal check which gets lost in the shuffle, the money stays in your account. If you send someone a check and they refuse to accept it, the funds stay in your account.
When you reconcile your checking account statement it’s easy to spot which checks may have been lost or declined.
This is exactly the way online check writing used to work under the Fleet Bank system.
On June 13th, Bank of America shut down Fleet Bank’s original online payment system and invited all of us to register for their own system a week later on the 22nd. What may not have been at all clear from the paperwork explaining the transition is that the new checks you are now writing are essentially cashier’s checks.
If you’ve ever used a cashier’s check, also known as a bank check, you know that it is quite different from a personal check. While I can write a personal check for more than is currently in my account (assuming I know a deposit will be arriving before the check will be cashed) a bank check requires that the funds are in my account at the time the check is written. The funds are withdrawn from my account when the check is created; permitting the bank to guarantee that the check will not bounce.
The downside to a bank check is that if the check is lost, stolen, or declined by the recipient, the money stays missing from my account. Unless I hear about what happened to the check by other means, I will never know that it did not reach its intended recipient. If the check is lost or refused, the money may sit in the bank’s special fund for uncollected cashier’s checks for a very long time.
I expect that it is exactly this period of time – between requesting the check and its collection – that permits Bank of America to offer online banking at no additional monthly charge. It takes a minimum of two to five days for a check to be sent. Additional days or weeks may pass before paper checks are returned to the bank for collection. During all that time, the bank can arrange to earn interest on these funds for their own benefit.
If you understand these changes and make adjustments in how you use online banking (don’t send Jimmy an online check), Bank of America’s system may continue to make sense for you. The transition may make sense given the increasing percentage of all electronic transactions.
As always, it pays to read the fine print.