The deposit of a personal check is only the beginning of the clearing process.
Deposit into your account isn't the end of the road for a personal check. In fact, it is only the beginning of its processing cycle. After you deposit a personal check, your bank performs a series of steps to demand money from the check writer's bank. The check clearing process occurs behind the scenes, however, so you can usually forget about the check after your deposit -- unless it bounces.
Personal Check Deposit
To receive cash from a personal check, you first have to deposit it into a bank account. You endorse the back of the check and the bank accepts your deposit. The bank has to complete a process of converting the check to cash, also referred to as check clearing. Often, this process takes a few days to complete, so your bank may not make the deposit amount available to you right away.
Electronic File
After accepting the deposit of a personal check, a bank usually copies the front and back of the document. The bank uses this copied check to create an electronic file. Instead of sending the original check to the bank on which it is drawn, your bank sends this electronic file as its demand for the money due. In the past, banks sent physical checks back and forth to request payment, but most banks have replaced this lengthy process with electronic processing.
Clearinghouse
Once the electronic file for your personal check leaves the bank, the institution transmits it to a clearinghouse, which is an intermediary bank or corporation that facilitates the exchange of checks and currency. The clearinghouse analyzes the information from the electronic file and uses the routing numbers to determine which bank should receive the file and clear the check. The routing numbers used for this part of the process are usually nine digits long and found along the bottom of a personal check.
Check Clearing
When the bank on which a personal check is drawn receives the electronic file, it determines the account from which to draw the funds by matching the account numbers in the electronic file to one of its accounts. It then determines whether the account balance is sufficient to clear the check. If so, the bank sends the appropriate amount of money to the receiving bank. If the bank account has too little money to clear the check, the bank usually sends the electronic file back to the original bank via the clearinghouse. The bank usually debits the check writer's account in either case, however. If he has enough funds, the bank debits his account for the amount on the check. If he lacks sufficient funds, the bank debits the account for an overdraft fee.
