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 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. Just how are bank stress tests performed and what is the logic behind them? And is a stress test useful for evaluating a bank's stock?
    Investing Basics

    An Investor's Guide To Bank Stress-Testing

    Just how are bank stress tests performed and what is the logic behind them? And is a stress test useful for evaluating a bank's stock?
  4. Credit & Loans

    What is the difference between a state and a federally chartered credit union?

    Learn how federal chartered credit unions are regulated by the NCUA, while state chartered unions are regulated by their state's division of financial services.
  5. How does WFC make money? They lend it out at a higher rate than they borrow it at. Simple, right? But the real story is how proficient they are at it.
    Stock Analysis

    How Wells Fargo Became The Biggest Bank In America

    How does WFC make money? They lend it out at a higher rate than they borrow it at. Simple, right? But the real story is how proficient they are at it.
  6. Insurance

    Bag The Best Bank Account

    Take advantage of the deals banks offer, and find the right account for your financial situation.
  7. Retirement

    Tired Of Banks? Try A Credit Union

    These nonprofit organizations can provide a range of services for lower fees.
  8. Personal Finance

    Bank Advisor Blunders And How To Avoid Them

    Unfortunately, this business tends to focus on sales rather than customer service.
  9. Savings

    Are Your Bank Deposits Insured?

    Learn how the FDIC is helping to keep your money in your pockets.
  10. Budgeting

    The Basics Of Financial Responsibility

    Just being able to make your credit card payment doesn't cut it. Find out what does.

You May Also Like

Hot Definitions
  1. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. ...
  2. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  3. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  4. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  5. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  6. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
Trading Center