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Have you ever wondered what happens to a check after you write or deposit one? All checks go through the process of check clearing after they have been deposited at a financial institution. Check clearing is the process of moving money from the financial institution where the check was drawn to the financial institution where the check was deposited to complete a payment made by check.

After you write the check, you should consider the money spent. A good way to ensure that you do not spend the money meant to cover the check is to balance your checking account. You can do this by recording your transactions to make sure you have enough money in your account to cover the check when it clears. You may have to wait a few days to see the money actually leave your account. During this time, the check is known as “outstanding.”

When you sign the back of a check and deposit it, you become responsible for that check. The risk of the check bouncing or being bad is on you.  Federal law (Regulation CC) requires that all financial institutions make at least part of the amount you deposited available within a few days. However, you can run into trouble if you spend the money before the check is fully cleared. If you spend the funds from a bad check, you are responsible for paying the money back to the financial institution. In addition to being responsible for the dollar amount of the check, you may also be subject to processing fees assessed by your financial institution for checks which have been returned for NSF (Non-Sufficient Funds).

Check holds are a temporary delay in making the funds in your checking account available after you deposit a check. Check holds can be placed for a variety of different reasons including checks for over $5,000, new account checks, redeposited checks, and suspicion of fraudulent checks.