Float Time

AAA

DEFINITION of 'Float Time'

The amount of time between when an individual writes and submits a check as a payment and when the individual's bank receives the instruction to move funds from the account. Before the implementation of the Check Clearing for the 21st Century Act (Check 21), the average float time was two to four days, but now most checks are cleared within a day.

INVESTOPEDIA EXPLAINS 'Float Time'

Prior to Check 21, individuals would sometimes take advantage of long float times and send out checks despite not having enough money in their accounts to cover the value of the check. This can give creditors the impressions that payment was available despite the fact that the individual did not have the funds when he or she actually wrote the check.

Individuals who attempt to use a check's float time in the manner previously described should be aware that doing so will likely result in a number of bounced checks as float times have become dramatically shorter because transferring checks in electronic format has hastened the clearing process.

RELATED TERMS
  1. Negative Float

    The period of time between when a bank customer writes a check ...
  2. Electronic Check Presentment - ...

    A process that allows financial institutions to exchange digital ...
  3. Business Day

    A measurement of time that typically refers to any day in which ...
  4. Controlled Disbursement

    A technique commonly employed in corporate cash management. Controlled ...
  5. Deferred Availability

    A delay in the availability of funds to the holder of a commercial ...
  6. Check

    A written, dated and signed instrument that contains an unconditional ...
RELATED FAQS
  1. What are the pros and cons of online checking accounts?

    Online banking offers a convenient alternative to keeping your checking account with a brick-and-mortar bank. With an online ... Read Full Answer >>
  2. Why would you keep funds in a money market account and not a savings account?

    Most banks offer both money market accounts and savings accounts for depositors, although money market accounts are less ... Read Full Answer >>
  3. What is the difference between a state and a federally chartered credit union?

    The world of credit unions is divided into two categories: state chartered and federally chartered. Though they share many ... Read Full Answer >>
  4. What's a better way to borrow money: overdraft or credit cards?

    If you have an overdraft line of credit at your bank, you can spend more than the amount in your checking account. In exchange ... Read Full Answer >>
  5. What are the pros and cons of overdraft protection?

    If you sign up for overdraft protection and link your checking account to your savings account, a credit card or an overdraft ... Read Full Answer >>
  6. If I want to have some cash in a liquid account for unexpected emergencies, what ...

    It's always a good idea to keep some money set aside in a liquid form, but it's a double-edged sword, because the more liquid ... Read Full Answer >>
Related Articles
  1. Budgeting

    The Beauty Of Budgeting

    Make it to the end of the month, before you run out of money.
  2. Insurance

    Your First Checking Account

    This owner's manual will show you what to expect from your bank.
  3. Savings

    Expat's Guide To Bank Accounts In The Philippines

    You'll need an ACR I-Card and other documents to open a bank account in the Philippines. Be sure to read the fine print about how much money is insured.
  4. Credit & Loans

    The Pros & Cons Of Personal Loans vs. Credit Cards

    One is not like the other. We help you decide where to borrow money from.
  5. Budgeting

    Should You Pay Your Bills On Autopilot?

    Now that you can sign up to have your bills paid automatically online, it it a smart way to make your life more efficient? A look at the pros and cons.
  6. Entrepreneurship

    Technology, The Biggest Threat For Big Banks

    Technology is the biggest threat to the future of big banks as we know them.
  7. Personal Finance

    4 Tips To Cut Your Monthly Bank Fees

    We asked banking professions to share their biggest tips for tackling bank fees, and hopefully save more even before spring hits.
  8. Savings

    Mortgage Faceoff: Bank of America Vs. Wells Fargo

    Which bank offers the better mortgage deal? Here's how they compare on two popular types of mortgage.
  9. Savings

    Say Goodbye To Overdraft Fees

    At $35 a pop, overdraft fees can mount up quickly. Here are 4 different strategies for avoiding them.
  10. Savings

    Top Checking Accounts With No Overdraft Fees

    Choosing the right checking account could save you hundreds of dollars in fees every year.

You May Also Like

Hot Definitions
  1. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  2. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  3. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  4. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
  5. Wash Trading

    The process of buying shares of a company through one broker while selling shares through a different broker. Wash trading ...
Trading Center