New Checking Law Takes Effect

Banks began adhering to the Check 21 law yesterday. The law aims to update the way checks are processed. (Mike Derer -- AP)

Check out your checking account -- and make sure you have enough money in it before you write any checks from now on.

Under a law that went into effect yesterday, banks can now process checks electronically; they no longer have to physically ship them from one bank to another before they are debited to an account.

As a result, Check 21 -- as the new law is called -- will mean that checks may clear a lot faster than they have in the past. Consumers won't be able to count on any float -- the time between a check is written and cleared -- to keep their checks from bouncing. Banks, though, won't be required to shorten the "hold" times they place on deposits, so consumers need to plan carefully.

With electronic check-clearing, consumers may not be getting back all of their original canceled checks with their bank statements. Instead, the law permits digital copies, called substitute checks, which will be considered the legal equivalent of an original canceled check.