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How 9/11 Affected Your Bill-Paying Practices

As we approach another anniversary of the 9/11 attacks, the media will be full of remembrances of the tragic events of that fateful day.  None of us will ever forget it.

I was working for a CPA firm at the time, on the tenth floor of a building in downtown Pittsburgh, shut off from the outside world because of our distance high in the sky and firm rules which prohibited us from listening to radios or checking the internet for news during working hours.  I became aware of what was happening when a client called and canceled a meeting that we had scheduled for later in the day.  Soon panic would ensue as everybody who was downtown decided to get home as soon as possible.  I hopped onto a crowded bus---a very crowded bus---which took a different route home, careful to avoid tunnels and bridges.  We were stuck in the type of traffic jam seen in this town only after the Steelers win the Super Bowl.

As the events of 9/11 are recalled by the pundits, I doubt any of them will discuss the effect that 9/11 had on banking practices and in turn how you pay bills.  You might notice that when you get your monthly bank statement, there is one list of checks that have cleared in the ordinary fashion and a separate list of checks that were converted to electronic transfers by the payees.  The latter list often includes checks written in payment of mortgages, credit cards, and utilities.

After the events of 9/11, when planes were grounded for several days, millions upon millions of checks that were to be sent to the payer banks to be cleared were also grounded.  It was decided that another system was needed, because if this country were ever to be under attack for days at a time, checks would take weeks and months to clear, potentially damaging our economy.  Thus the system that permitted payees to convert checks to electronic transfers, and thus get their money instantly without waiting for the checks to clear, was born.

This new system affected those of you who hoped to gain a few days' "float," maybe by mailing checks to your creditors a few days before your paycheck was to be deposited.  Perhaps this new system even caught you by surprise and you bounced a few checks before you knew what was going on.

If this affects you, there are a couple things you can do.  See whether you can get checking privileges on your savings account, so that you could write checks from it for those bills that are coming due before you receive your paycheck.  You can also arrange with your bank to get overdraft protection, with the necessary funds to cover overdrafts coming from a home equity loan or a bank credit card, depending on which you might qualify for.  Under either of these solutions, you will want to replace the money when your paycheck comes in, so as not to start an inescapable cycle of draining your savings or adding to your debt.  In any event, the days of relying on float are over forever.

Of course, the best course of action is simply to get your financial affairs in order so that you don't have to concern yourself with such matters.  Hopefully these weekly blog postings are helping you get there.