Never Try To Game The Float. Ever.

Used to be with check that you could count on there being at least 3 days between someone cashing your check and the charge being run on your account. The delay is called “float” and writing a check before you have the money but think you’re going to deposit enough is called “gaming the float.”

It’s not only a bad way to manage your money, it’s illegal, and tightening bank standards are making it punitive for debit card users, like David, to do in the first place.

david: I had some questions about debit cards… specifically, I am currently finding myself in a situation similar to this post: Apparently, 5/3 Debit Cards Are Instant Magic Money Wands
david: so I called USbank just a few minutes ago
david: and i asked about the overdraft charges on the positive ledger account, and they said they assess overdrafts by the available account
david: it just seems excessive
david: im kinda frustrated is all
benpopken: The basic rule of thumb is never spend any money from your bank account that’s not completely there at the time of transaction
david: yeah, i guess i’m in the wrong
benpopken: With the passing of the check clearing for the 21st century act
benpopken: you have to assume they’re going to withdraw instantly
david: but they dont have a problem with holding my checks for a few days…

— BEN POPKEN

Comments

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  1. Moosehawk says:

    Bad way to try to manage money.

    I notice with my debit that it takes almost 3-4 days for a transaction to go through when I go to any gas station. Is that just me?

  2. mikesfree says:

    I used FirstStar, which became usbank, when I frist started banking in St Louis area. They held my paycheck (from one of the biggest companies in america) for seven days before crediting the account. Ok, I can deal with that, I am getting direct deposit. Got direct deposit. They held the direct deposit too, but only for a day. After one check failed, I closed the account and have been treated very well at a credit union.

  3. acceptablerisk says:

    I’ve never quite understood the whole “float” thing. It just seems to be a bad practice. What’s the whole point of it anyway? If you’re going to have the money to cover it within a day, why not just wait to buy whatever it is you’re buying?

    And if it’s for necessities, stop buying expensive coffee a few weeks and build up a bit of a buffer in your checking account.

  4. ScramDiggyBooBoo says:

    @Moosehawk: No it is not just you. I have been doing that “trick” for years. When you get gas (say 20) then the gas station checks your account for 1 dollar and then you can get all the gas you want. Use it as a credit, or the money will come out as soon as you put the pump back in. I have gone there many times 3 days before i get paid with like $1.50 in my account and i fill up to about 30 bucks. After the sale, the gas station takes $1.00 out and then take the remaining money. In this case, the $19.00 a few days later. By that time i have been paid and the amount clears without a problem. Ironic how this post is about being smarter with money and i am showing people how to be dumber. Oh well, works for me!!

  5. enm4r says:

    This story is tired. Stop floating checks, it is fraud to write a check for money that you do not have deposited to cover the amount. It’s hard to feel bad, but banks could honestly start charging twice what they do for overdraft and I wouldn’t mind because….amazingly….I DONT WRITE CHECKS I KNOW CAN’T CLEAR.

    There is no excuse anymore.

  6. Moosehawk says:

    @ScramDiggyBooBoo:

    lol nice tip. I might have to start doing that with recent gas prices. I filled up this morning for $35 (which isn’t bad, my lancer gets 25-30mpg depending how I drive it). About an hour later I saw prices go from $3.04 to $3.29.

    Whew.

  7. putch says:

    Floating is bad practice. Yeah yeah. But it’s total bullshit that the check I write to my landlord posts in a matter of hours while my paycheck can take up to four business days to clear. I really don’t understand that.

    Seems like they’re always in a hurry to take money out of your account and drag their feet as long as possible to put money it.

  8. bedofnails says:

    When I used to work HR in Southern California, you wouldn’t believe the amount of employee’s that would float checks on their direct deposit.

    Of course, every few months; there would be a several hour delay in the direct deposit hitting ee’s account, and suddenly they wanted us to cover their overrdraft fees.

    I’m not talking about polietly asking either, I’m talking “demanding”, alleging that the employer is at fault.

    (Every direct deposit agreement states the money will be credited within 24-48 hours of the pay day; subject to each financial institution. I think we have all grown accustom to this money looking at us when we wake up on payday.)

  9. MentalDisconnect says:

    @acceptablerisk: -claps- Amazing thoughts. I’ve never drained my account down to zero, I can’t imagine doing so. I always have at least $100 buffer in checking, and more in savings. I’m not rich by any means, but how… do you live always to the zero like that? What if something major happens? Perhaps I sound elitist, but I’m trying not to be… I just.. always believe in having a certain amount in your account… and if that amount is being chipped away at, some major change needs to take place (better job, lifestyle change…)

  10. xkaluv says:

    Never float for over $500 in most parts of the country it’s a Felony.

  11. FLConsumer says:

    For those of you who still do this crap, I have an awesome book for you:

    http://consumerist.com/consumer/clips/snl-skit-dont-buy-st

    Don’t buy shit you can’t afford. Afford = have the money NOW. Not tomorrow, not next payday, N-O-W. NOW. If you’ve only got $1.50 in your account, you need to seriously evaluate your finances.

    I don’t want to hear the crap, “I can’t save any money because…” I’ve lived in my car before, I know what it’s like to have NO available money. I now have two homes and an enjoyable lifestyle. If I can pull this off without a college degree, anyone can. FWIW, I did go back to school and finally got my degree last year. So far it’s not helped me earn $0.01, but at least I can claim it now.

    You should have enough liquid cash to get you through at least a month without income. Shit happens. 9/11 happened. When 9/11 happened, everyone who received paper checks from my company was screwed because mail delivery was stopped and the checks were in the mail from the payroll company. Anyone who had already spent that money and tried to float it was screwed, and rightfully so. Check floating always has been illegal. Just be glad the banks aren’t interested in pressing charges, as they easily could.

  12. But it’s total bullshit that the check I write to my landlord posts in a matter of hours while my paycheck can take up to four business days to clear.

    @putch: Exactly. I don’t know how they justify it (if they do at all). They must make more money in overdraft fees than in interest because otherwise it’d be the other way around.

    I’m not rich by any means, but how… do you live always to the zero like that?

    @MentalDisconnect: It’s easy when you’re broke.

  13. Erik_the_Awful says:

    David can prevent USBank from holding onto checked deposited to his account for a few days by CASHING the check and then depositing the cash. Be aware that if the check is bad, it will still come back out of the account according the the USBank representatives I’ve talked to.

  14. alhypo says:

    What about post-dated checks? Is that allowed? What happens if someone tries to deposit a post-dated check early?

    Of course, using this method is basically admitting you don’t have enough money to buy whatever it is you’re buying, so the payee will probably be reluctant to accept it.

    I have yet to write a check that wouldn’t clear. Heck, I don’t even charge to my credit card unless I already have enough money to cover it. I like the buffer method outline by MentalDisconnect.

  15. Erik_the_Awful says:

    @alhypo: Alhypo, I think it varies from state to state. If I remember correctly, Washington/Oregon allow post dated checks to be deposited REGARDLESS of the date on the check. I’ve noted some businesses get around that by having a contract that states they won’t deposit a post dated check.

    At the end of the day, the advice in the title of this article is golden. Don’t spend money you don’t have. Don’t game the float

  16. mac-phisto says:

    @putch: here’s how they justify it: regulation CC & the EFT act. CC puts forth the standards for funds availability. EFT act spells out the rules for electronic transfers. they can hold a direct deposit for four days b/c that is the amount of time an ODFI has to revoke a deposit from your account thru the ACH. plus, it makes them LOADS & LOADS of money, bouncing all your checks as “uncolelcted funds” at $30+ per.

    @Erik_the_Awful: that’s a shell game that doesn’t fool anybody. most banks will only allow you to cash a check against availabel funds. so, if you have $1000 in your account & you cash a $500 check & then deposit the $500, you think you have $1500 available, right? wrong. you have $1000 available & $500 of your money is being held.

    @alhypo: you can’t post-date a check. period. banks don’t care about a checks’ date (unless it’s stale-dated). if you write a check to your landlord on the 1st with a date of the 15th, he can take that check in on the 1st. most banks may discourage him from depositing it as it is a sure sign of a rubber check, but they will usually let it pass. furthermore, post-dating can get you into some trouble b/c it deals with fraudulently passing legal payment instruments in bad faith.

    gaming the float is a bad idea simply b/c it’s the banks’ game. it’s comparable to walking up to a craps table & expecting to win every time. it’s possible, but highly improbable. & depending on your usage, you’re bound to get burned BAD. i had a friend who had an entire paycheck eaten up by o/d fees. he had a hard time living on $1.50 that week.

  17. kerry says:

    Here’s something annoying I’ve realized about Chase. I’m not someone who tries to game the float, ever. But Chase will take a deposit, like my direct-deposited paycheck, and put it in my account as “pending” — which is fine — but they’ll apply that money to my “available balance,” as displayed on an ATM receipt. So what I’ve found I need to do is keep checking the web site to see that the money has stopped being “pending” before making any purchases that could, in any way, eat into that deposited money. I just wish they would call that money “available” when I’m certain that if I spent enough to need that money they would immediately charge me an overdraft for going over my available funds. It’s like they want to trick me into floating money, when I absolutely do not want to.

  18. kerry says:

    @kerry: I meant to say “wouldn’t call that money available.” whoops.

  19. Erik_the_Awful says:

    @mac-phisto: Not entirely true. If you go to a USBank to cash a USBank check, I believe you do not have to have an account. They DIRECTLY cash it.

    I can’t speak to most banks. I have present experience with USBank and a credit union. Depositing cash in person hits the AVAILABLE balance immediately. Not in 3 days, nor 30 minutes, Right Away.

    If your bank (a) normally holds your deposited funds for more then 2 days, and (b) only allows you to cash a check against the funds already in your account, its time to find a better bank.

    Additionally, you should note that if you cash a check that turns out to be bad, the CHECK WRITER can be held liable for the resulting overdraft fees in several states.

    It’s not a shell game here. If it’s a shell game where you are you have my pity.

  20. mac-phisto says:

    @kerry: it’s like they want to trick me into floating money. that’s exactly what they’re doing. the new practice in banking is to draw more ppl into the overdraft revenue stream. games like what you refer to, o/d fees on pending transactions & courtesy o/d on debit cards are designed specifically to generate fee income from ppl that normally wouldn’t overdraft.

  21. mac-phisto says:

    @Erik_the_Awful: i’m confused. if you are talking about cashing a check at the institution that the instrument is payable thru (ie – cashing a usbank check at usbank), that’s one thing. simply trying to cash out a check thru your acct. (which is what i thought you were referring to) is what i was deeming a shell game.

    keep in mind that many institutions have undertaken the questionable practice of not cashing checks drawn on customer accts. to non-customers. this maynot be the case at usbank, but it is so at many large financial institutions. interestingly, there’s no law that specifically requires an institution to honor that draft at a branch location (despite the fact that it says “payable through”).

  22. FLConsumer says:

    @mac-phisto: My credit union makes the first $250 of any check available immediately, the rest becomes available after 2 days. Not sure why they do this, it’s not like $250 is going to make much a difference to interest earned or buying power.

  23. SkippyKilimanjaro says:

    Credit Unions seem to be more consumer friendly. The only time my CU ever held any portion of a deposit was when I re-deposited a check that had previously bounced. They held that one for 10 days. Other than that, once they hand me that deposit receipt, the funds are available. In fact, it shows your available funds right on the receipt.

    As long as my credit union keeps the same policies in place, I don’t foresee ever banking with a ‘normal bank’ again.

  24. quail says:

    Back in the neanderthal 70’s and 80’s I watched my parents play the float game like champs. Four seperate banks, six places to get money orders, nine employees who never asked questions, and the float was on. They did it for years generating a fake balance that never existed at their banks. Eventually they did earn enough money to stop the float but it was a long ordeal. At one time they must have had about an extra $3K to $6K in each account due to the float.

    It’s that kind of family B.S. that requires therapy.

  25. karmaghost says:

    FYI: It is also illegal to put a date on your checks that is beyond the current date. In other words, if today is the 12th and you make a purchase at the grocery store, it is illegal to put a future date (i.e. anything beyond the 12th) on that check. People tend to try this whenever they know they don’t have the money in their account yet, but will at a certain date.

  26. asherchang says:

    It’s generally a bad idea to rely on something happening in the future anyways…


    From my consumer ed class, this is the tip that I remember the most….

  27. asherchang says:

    I meant this topic, and not my first sentence.

  28. swalve says:

    it’s not called “gaming the float”, it’s called “check kiting” and it really is a crime.