> And so by presenting your check, which you think is substantially terminating a transaction, you are actually creating a new credit extension with your bank. They are extremely aware that you just asked them to advance you money, even if you are not aware that you did that. They already partially underwrote this extension of credit; that is why you were not shooed out of the building when you originally asked for a checking account.
I'm extremely confused about the usage of the word "need", and the implication that this need for the line of credit is what generates all these downstream problems.
The person depositing a check wants the money soon, sure. And the check bouncing or not depends on the person writing the check. The person depositing the check "should" "just wait"? Like don't extend the credit? Credit card processors hold onto your money for this exact sort of reason!
Yes, there are trust considerations. But don't move money that is not quasi-guaranteed? Pay for money flow? Make the trust relationship between banks and not between atomic actors? Risks are risks are risks but saying that people should be unbanked because their checks will bounce... I guess it's weird to have these pieces of paper have so much trust associated to them in the first place?
Maybe the check network doesn't work as well in this model. Fraud is a whole thing as well of course. I guess in this model people trust checks enough to allow groceries to be paid by check. Just feels extremely suboptimal.
You can ask the bank to hold the funds until final clearance - which can be quite long. Weeks or more.
Often if you really need to do that, you’re better off taking the check the bank it was drawn on, often having to open an account there first. Still can take quite awhile.
But before computers and electric communication, this was the best and fastest way, and since the vast majority of transactions are legitimate, it works.
Pratchett’s Going Postal is a decent look at the system.
No - but they can imply that you should, and if you don’t make cashing the check more onerous opening an account.
I had this happen to me 25 years ago with Wells Fargo. I was on vacation and had a check drawn on the branch I was standing in front of - and foolishly thought it easier to cash it right the and there than wait to get home and deposit it. Boy was I wrong.
I’d also done this once or twice as an actual child in the early 90s and then it was not a problem.
I'm extremely confused about the usage of the word "need", and the implication that this need for the line of credit is what generates all these downstream problems.
The person depositing a check wants the money soon, sure. And the check bouncing or not depends on the person writing the check. The person depositing the check "should" "just wait"? Like don't extend the credit? Credit card processors hold onto your money for this exact sort of reason!
Yes, there are trust considerations. But don't move money that is not quasi-guaranteed? Pay for money flow? Make the trust relationship between banks and not between atomic actors? Risks are risks are risks but saying that people should be unbanked because their checks will bounce... I guess it's weird to have these pieces of paper have so much trust associated to them in the first place?
Maybe the check network doesn't work as well in this model. Fraud is a whole thing as well of course. I guess in this model people trust checks enough to allow groceries to be paid by check. Just feels extremely suboptimal.