What happens when you deposit a check into your bank account?

Question

Step by step (to the smallest detail), how does the check "clear"???

Answer 1

The customer deposits the check, the teller processes it in their system. The amount is put into the account and usually placed on a hold. The length of the hold depends on where the check is from (Regulation CC) The check is sent to the back office for encoding (or putting the amount in numbers on the bottom of the check).  The checks are bundled up and sent the federal reserve bank. There are 12 federal reserve banks, so it get sorted to the appropriate one.

The Federal Reserve then DEBITS* the federal reserve account of the bank the check is coming from and CREDITS* the account of the bank the check is going to.    The check (or image) is then sent back to the bank the check is drawn on and processed to make sure the account is open, has money, etc.  The bank can pay the item or decide to return the item to the bank of first deposit, kinda like return to sender. There are various reason a check is returned.  The item is then deducted from the customer's account. The checks can either be electronically saved and printed with the statements or as in the olden days, they were actually sent back to the customer.

In a world where everything is going electronically, there are STILL a *LOT* of checks. They aren't going away.  Last I heard was approximately 18 million checks going through the federal reserve.

*Accounting and banking have different ideas of credits and debits. ;-)

Answer 2

A clerk types in the amount of the check; it gets printed on the check.  The amount and the check routing numbers get sent to a computer which balances funds.  The physical check is sent to the originating bank (typically through a Federal Reserve check processing center), where it is photographed and then destroyed.