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Learn more about a variety of important topics regarding online security and financial concerns.

Has My Check Cleared?

Every day millions of checks are cashed or deposited in banks across America. Every bank must provide its customers with its “Funds Availability Policy” that outlines practices for making funds available after deposit for withdrawal. When a bank tells you that your funds are “available for withdrawal,” however, that is not to say that your check has “cleared,” or that your check will be paid by the bank on which it is drawn.

What’s the difference?

“Available for withdrawal” is a legal term defined by federal law and regulations designed to provide customers with quick access to their funds. It is based on the premise that the vast majority of checks are processed quickly through the payment systems and are drawn on legitimate accounts that have sufficient balances to pay the check.

Unfortunately, some checks are fraudulent or are drawn on accounts with insufficient funds or  that have been closed. This is a real concern for consumers and financial institutions, as fraudulent checks are always circulating.

A common example is what is known as the “cashier’s check scam.” A consumer advertising an item for sale receives what looks to be a legitimate cashier’s check for more than the sales price from a buyer, and is asked to deposit it into the seller’s account, then wire some of the “excess” portion to a third party the seller does not know.

It may take weeks or even months for the counterfeit cashier’s check to come back to the customer’s bank unpaid, especially if the check is drawn on a bank outside the United States. These scams are also run with counterfeit money orders and treasury checks.

Technically, there is no simple way for your bank to declare with certainty that a check you have deposited to your account is “good” or will clear, unless the check is drawn on another account at your bank.

Just because the funds are “available for withdrawal” doesn't mean that the check you have deposited will be paid by the financial institution on which it is drawn, even if it appears to be a legitimate personal or business check, bank treasurer’s, or cashier’s check. It could still be counterfeit.

Tips for Consumers:

  • Try to accept checks only from people or entities that you know
  • Never accept a check or money order under any conditions that require you to deposit the item, then wire a portion of the amount to a third party you do not know. This is almost always a SCAM!
  • Understand that while most checks are “available for withdrawal” quickly, you, the depositor, are responsible for checks and money orders you deposit. If a check you have deposited is returned to your bank unpaid (it “bounces”), and you have already withdrawn the funds, your bank has the right to obtain reimbursement from you. You are responsible for any loss.
  • If you’re not sure about the status of your deposited check, don’t ask your bank if the funds are available or if the check has cleared. Instead, ask if the funds have been “finally collected.”

 

Loan Scams

Watch out for lending scams, or you could lose your home.

This public service message is made possible by support from the Massachusetts Division of Banks, the Massachusetts Community and Banking Council and the Federal Reserve Bank of Boston.

  • Be careful what you sign: Have you received a pre-approved home loan in the mail? Have you seen TV ads for loans that will lower your bills? If you think these schemes will get collection agencies off your back, be careful. There are companies who may seem like they want to help you, but they may only make things worse
  • Scam lenders are out to trick you: In their ads, some lenders may promise low rates as bait to get you to sign on. Then at closing, or maybe six months later, they may switch you to a higher rate without telling you. They may also hide extra costs in the wording of their loans. Costs you may not be aware of, and may not be able to pay back.
  • Don't put yourself deeper in debt: These same lenders will tell you that lower monthly payments can save you money. What they don’t tell you is that they’re combining all your debt into a long-term loan. So you end up paying out more money over a longer period of time.
  • Don't put your home at risk: Many people don’t realize that these loans are mortgages which use their house as collateral. If you can’t pay, the lender can take your house from you as payment. That's one reason why the number of people losing their homes to foreclosure in the U.S. has grown 200% since 1980. Don’t let this happen to you.
  • Let us show you your options: There are other ways to get out of debt. We can put you in touch with people who will tell you about the different choices you have and who will explain all your options. Options that won't put everything you've worked for at risk.
  • Our help is free: If you have questions about what you're signing, call us for advice. We can warn you about possible lending scams and help figure out if the terms of your loan are unfair. We'll also help you understand the options open to you and direct you to other sources of information and assistance. Call (800) 495-2265 for more details about home loan scams -- your one-stop source for home lending information and referrals.

Do you have questions about refinancing or foreclosure prevention? We can refer you to agencies in your area that can help. Call us to learn all about your options.

 

Additional Resources and Assistance

FDIC: Consumer Newsletter Index -- helpful articles on personal finance topics 

FDIC: Additional coverage for Individual Retirement Accounts 

Microsoft® - Security at Home: A user-friendly resource describing how to protect and maintain your Microsoft® Windows based PC. 

Apple Security: Describes security concerns for Mac products along with links to software updates.