Have you recently issued a check? Do you see the words “inclearing check” stamped at the back of your checks? What does inclearing check actually mean?
An inclearing check is a check issued from your account that a bank has received and the payee shows, either for cashing out or for deposit. The inclearing term refers to how banks traditionally deal with checks. To transfer the funds from the issuer’s bank to the payee’s bank, it needs to go through the clearing process.
Read on to find out more about inclearing checks, the clearing process, types of checks, and much more.
Inclearing Check (What Does It Mean?)
It’s easy to issue checks. But, bank terminology can sometimes be confusing or difficult to understand. What do you mean when they say “inclearing check”?
An inclearing check is a check issued from your account that a bank has received and was presented for cashing out or for deposit. The inclearing process is a part of how banks traditionally deal with checks. To transfer the funds from the issuer’s bank to the payee’s bank, it needs to go through the clearing process.
Sometimes, when you check the status of your check online, you’ll see the words “pending inclearing.” This means that the bank has received the check and all you need to do is wait until the check clears. Wait a few days, and then you’ll be able to see if the check has then cleared.
What Is a Check?
A check is a document that secures payment for a certain amount of money to an individual. It is a printed piece of paper that lets you make a payment with your bank account number and signature on it.
You write the exact amount of money that you are paying to the receiver. When it is deposited or encashed, the bank draws the money from your account and either hands the cash to the individual or transfers it to their account. Issuing and receiving checks is a safe form of payment if you don’t want to handle cash.
To issue checks, you must have a checking account with a bank. The account must be under your full name, validated by a government-issued ID to let the bank pay the given amount on your checks to the payee, whose name will also appear on the check.
Checks give you security in payments because you won’t have to handle cash, and there’s always documentation of your payments.
A check should always be dated to be valid. It needs to have the amount to be paid both in figures and words. The person who issued the check should sign it. It needs to have the name of the recipient of the check.
The Check Clearing Process
Check clearing can be anywhere from one to several days, depending on your bank. International check payments will take longer to clear. To have a check clear, the payee will bring the check received to their bank and either deposits it or cashes it out. The bank then will collect the issued funds from the bank of the check issuer.
If the issuer and the payee both have the same back, check clearing will be faster. It goes faster because it’s an internal transfer and can be done within 24 hours. Cashing out a check at the branch of the issuer’s bank is a quick transaction where you can get the funds immediately.
Previously, the process was that the receiving banks would physically send the paper checks to the issuer’s bank or a clearinghouse, and the funds would then be drawn from the issuer’s bank.
Now, the images of the checks are sent digitally, so the process has become quicker and easier. If the funds from the issuer’s bank cover the amount issued, then there is no problem with the fund transfer, and the amount is credited to the payee’s bank.
With the technology today, you can track the status of your check online and see if it still is inclearing of it already has cleared.
Check Clearing Time
So, you’ve issued that check. How long before it clears? The bank will discuss with you their policies about checking accounts. They will have a hold policy on checks. This is to make sure that the funds are sufficient and available in the account of the issuer. This also protects you from incurring whatever charges the bank may have on drawing from insufficient funds.
On average, it takes two business days for a deposited check to clear from the inclearing process. In some instances, it may take longer. This will depend on the amount issued, the funds in the issuer’s account, etc. if your check has not cleared after three days, call your bank.
If the check is for a large amount and you have never received it from the issuer before, they may have to do a longer hold time so the fund transfer can be first verified. The same goes for international checks, where they need to verify the transfer first.
Depositing a Check
When you deposit a check to have the funds moved from the issuer’s bank account to the payee’s bank account, it goes through the inclearing process. Here are the steps in depositing a check.
Depositing at the Bank
- Endorse the check. There’s an area at the back of the check that says “for endorsement purposes”. You’ll need to sign there. It’s suggested that you do this when you already are at the bank for safety purposes.
- Fill out a deposit slip with the details of your check and of your deposit. This will include writing down your name, account number, the amount for deposit, and check number. You’ll then need to sign the deposit slip.
- Hand the deposit slip and the check to a teller. Sometimes, you’ll need to have to show identification so have a government-issued ID ready. The teller will then validate the deposit slip and hand you a copy.
Depositing through the ATM
Some ATMs will let you deposit a check if it may be more convenient to deposit through the ATM if your schedule doesn’t let you go to the bank during their business hours:
- Key in the amount you have to deposit. You have to enter the exact amount of money you will deposit.
- The ATM will then prompt you to place your check in envelope slot for collection.
- Upon depositing the check, you have to verify the details you keyed in.
- The ATM will then print out a receipt. Take the receipt and your credit card.
Depositing through your smartphone
Some banks will allow you to deposit via mobile phone. Check with your bank if they allow this. If they do, here’s how to do it.
- You need to download the app that your bank uses. Ask your bank for their official app to be sure you are downloading the correct app.
- In the app, you’ll see a deposit option or drop-down menu. Click the check deposit option.
- Endorse the back of the check by signing on it.
- Take a clear photo of the check. Make sure that all the details can be readable. Take a photo of the front and of the back of the check.
- Give the needed information as the app prompts you. It will ask for check number, amount written on the check, etc.
- They will then send you a transaction receipt which will probably automatically save on the app.
Again, what is an inclearing check? An “inclearing check” refers to the check received by the bank in person for cashing or deposit. It can also be in an automated form. Commonly, the “inclearing” is used for actual check that has to go through the inclearing, or a bank’s traditional way of handling checks.
Different Types of Checks
We discussed what clearing check means. It’s the check that the payee presents to the bank either for clearing or for cashing out. Let’s now look at the different types of checks:
1. Bearer Check
A bearer check where the check is issued to whoever holds the check. You’ll see “or bearer” printed on the check. Extra care is needed when handling checks like these because if they get lost, whoever gets a hold of them can use this check. The bank will need no authorization from the person who issued the check and will automatically make the payment to the bearer.
2. Order Check
These checks have the name of the payee on the check. The words “or bearer” do not appear on the check. The bank will authenticate and verify the check before transferring funds to the payee.
3. Crossed Check
When a payor issues a crossed check, he draws two parallel lines on the top left corner of the check. This symbol instructs the bank to transfer the fund to the account of the person whose name appears on the check. These checks are very safe.
4. Open Check
This is the opposite of a crossed check. Meaning, whoever submits the check to the bank can encash it. The recipient may transfer the check to another person as a form of payment too. These checks require the issuer to sign at the front and the back of the check.
5. Post-Dated Check
Post-dated checks have a later date written by the issuer on the dateline. You cannot transfer funds before the issuer’s written date. Some banks will accept the check early, for safekeeping, until the given date and then transfer the funds on the date itself. The check is valid after the written date.
6. Stale Check
Checks go stale. Often, banks will only accept checks up to three months after the issuance of the check. If you haven’t cashed or deposited the check after three months, these checks refer to stale checks.
7. Traveller’s Check
The bank issues the traveler’s checks when you need to travel abroad so that you don’t need to carry cash. You can encash these checks at banks in other countries, and they do not have expiration dates.
8. Self Check
Self-checks are checks you issued to yourself. In the drawee line, all you need to do is write “self.” You can encash these checks at your bank, where you have opened the checking account.
9. Banker’s Check
The bank issues these checks to a person who must reside in the same city. The bank draws the funds from your account, and then they issue a check on your behalf. The banks use these checks to issue large amounts of money as they are actually good as cash. Banker’s checks have a validity period of three months.
Conclusion: Inclearing Check
An inclearing check is a check issued from your account that a bank has received from the payee. The check can be either for a deposit or for cashing out. The inclearing term is commonly used to refer to how banks traditionally deal with checks. To transfer the funds from the issuer’s bank to the payee’s bank, it needs to go through the clearing process.
If the check were presented for a deposit, it would take anywhere from one day to three days to clear (for local checks). If the check was from a different country, it takes a few days more to clear. All checks, whether local or international, will go through the clearing process.