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How Long Does a Check Take to Clear?

To understand how long a check takes to process, it helps to understand that happens after the check leaves your check book and enter stores merchant account. Credit card processing is fast, but millions of checks are processed each day, so it is complicated for banks to track every check. This has an effect on how fast a check clears.

The general process first starts when someone buys something from a store. The owner of the store takes the check to the bank that the store uses. The check is then deposited to the bank. Although the check is deposited to a bank, the money may not be immediately available. However, if the customer and the store uses the same bank, the money will be available faster. Generally, 30 percent of checks customers use are provided by the same bank the stores use. When this happen, all check processing is done internally. When banks are not the same, the store will review the customer’s bank before attempting the cash the check. Many stores use intermediaries for this task.

There are a few types of intermediary banks. These banks are central banks, correspondent banks, and company compensation. An example of a central bank is the Federal Reserve Bank Companies use Federal Reserve Banks to process checks, but there are fees for the services. A bank that has partnerships with other banks are called correspondent banks. Company who use correspondent banks avoid the Federal Reserve rates. Correspondent banks are also used by foreign banks. Bulk check processing is offered by correspondent banks. This is a benefit because stores do not have to cash each check at a time.

Now that you understand the details of processing, you can now better understand the steps it takes to process a check. As mentioned earlier, the store deposits the check. The store then sends the check and a request to an intermediary bank. The correspondent bank gets information about the paying bank. To get this important information, the correspondent bank finds the destination number of the customer of the store’s bank. This information is found on the check near the lower left. Once the bank has all the required information, the correspondent bank will present the check and the payment request. After this point, the check is processed. Overall, the general time it takes to clear a check depends on if the person or company uses the same bank as you. If the banks are different, the check will take longer to clear.


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