You may already be familiar with Check 21, a federal law that goes into effect on October 28, 2004. If you're like me, this may be something you hadn't heard about until just yesterday. The Check Clearing for the 21st Century Act, otherwise known as Check 21, is the process of turning the checks your write into images and transmitting them by computer.

What does this mean to you?

Expect the time your check clears to decrease drastically. If you live paycheck to paycheck and often count on a one or two day "grace period" to get funds into your account after paying bills, you'll need to re-organize your budgeting process. Checks will clear in a matter of hours now, not days.

You will no longer be getting your cancelled checks back with your bank statement. If you get anything at all, it will be a "substitute check" which is a certain kind of copy of your original check.

You may be charged extra fees. It's possible that by using this method, your check will be paid twice: once with the original and once with the scanned image. Or there may be an error made in the amount a check was written for in the process of turning an paper check into an electronic check.

What you should do:

Re-organize your budget. You have to make sure that you have the funds in your account to cover every check you write to avoid bouncing any checks.

Request substitute checks. You will not be entitled to a credit to your account if an error has been made unless you have a substitute check.

Balance your checkbook. If you are not in the habit of balancing your checkbook with your bank statement each month, you need to start. This will ensure that you'll find any mistakes that may have been made.

Learn more. Consumer's Union did not support Check 21. Find out why and learn more about Check 21 HERE