More annoyance: Check21 and Bank Holds

So sick of bank holds. So I finally receive payment from my friend for the automobile purchase. Yes we waited through the line at the DMV License Plate office and the nice lady that helped us last time, reviewed the forms that my parents had notarized and then had my write my name, signature, and date–in blood–and–in triplicate no less. How’s that for typical government work?

I then drove to my bank to deposit the check my friend gave me for the purchase of the automobile. This is when I started to get annoyed. The funds would be held for nearly a week. How is this legal?

The Check Clearing for the 21st Century Act (Check 21) went into effect October 29, 2004. This means checks clear much faster, since banks do not need to physically transport the checks but rather an electronic copy is presented to your bank for payment. However, this does not govern the hold time for deposits. Apparently that is controlled by the Expedited Check Funds Availability Act. The allowed hold time is generally two days for local checks and five days for non-local checks.

So the money leaves your account faster, but doesn’t enter your account any quicker.

This is especially frustrating when I make a deposit to ensure money in my account so that the one automatic draft, my mortgage, doesn’t bounce or overdraft. Since this checking account does not pay any interest either, I have to really contemplate why I should continue banking with them. There are tons of options locally (with smaller local banks) and virtually (with online only banks like etrade, fidelity, ingdirect and emigrantdirect).

Why am I so hesitate to make the switch? Am I willing to pay for poor service and high service fees for the privilege of walking into a bank and speaking to a live teller? Or is just simply laziness–the autodrafts are already set up with my bank and would need to be reinstituted with a new bank. And what’s a few cents in interest anyway?

I take a deep breath and move on. Hey, it’s only money, right?