Deciding whether to let your bank keep those canceled checks

Bank of America calls it ``Time Saver/Space Saver.'' That certainly does sound better than ``truncation.'' The latter term refers to a system more banks are using to stop returning canceled checks to their customers. Because the San Francisco-based Bank of America's name for it is its own -- and because truncation sounds somewhat harsh -- a more commonly accepted term nowadays is ``safekeeping.''

Whatever it is called, it's one more way banks are trying to cut costs through reduced paper handling and postage. In most cases customers don't know what safekeeping is until they receive a letter from their bank ``inviting'' them to take part in this convenient new system, which eliminates the chore of storing canceled checks without giving up the ability to have those checks available as proof of payment.

Not too long ago, all banks provided such services -- like returning canceled checks, helping balance your checkbook, and accepting deposits -- at no charge. But now that banks have to compete for deposits, they must also think about what these sometimes mundane services cost to provide.

While this means customers who don't need or want shoe boxes full of canceled checks no longer have to pay for those who do, it also means making some evaluation of how you use your checking account and how often you need a canceled check for proof of payment.

If you think you might need copies of old checks even occasionally, or if you itemize deductions and expect to have to prove some of those deductions, you may want to stick with your own storage. Otherwise, you can let the bank dig up a copy.

Over the past 15 years, for example, I can recall needing to make a copy of a canceled check only twice to prove that a payment had indeed been made.

``That's pretty typical,'' says Pamela Keane, senior product manager at Bank of America. Much less than 1 percent of checks held in safekeeping need a photocopy sent out, she estimates. About 40 percent of Bank of America's 3.7 million personal checking customers let the bank keep their canceled checks.

Actually, the bank doesn't keep the checks. When checks arrive at the bank, those that are bound for safekeeping are automatically separated from those that will be sent back to the customers. Although both sets of checks are microfilmed, the truncated checks are then destroyed, Ms. Keane said. If a customer wants a copy of a check, he should be able to get it within 48 hours.

Providing an incentive to get customers to accept safekeeping isn't always as simple as adding a fee. At Sears Savings Bank in Glendale, Calif., it costs $1 a month to have canceled checks returned, spokeswoman Mary Shaubert says.

But at Bank of America, it's a little more complicated. If customers have safekeeping and use automatic teller machines much of the time, they can get a $1 credit on their monthly service fee.

While Bank of America does not charge to send a photocopy, other banks assess $2 to $4 for each copied check.

The hardest job for banks that initiate safekeeping is marketing the idea to customers, which is why some banks don't have it.

``We haven't gone with it,'' says Timothy Healy, a vice-president in the retail banking division at Harris Trust & Savings Bank in Chicago. ``We look at it as something that would have to be acceptable to our customers first.'' The effort to reach that point would be ``a major undertaking at this time.''

If safekeeping is offered, Mr. Healy continues, a minimum number of customers have to sign on for it ``to build up the critical mass you need to justify the expense.''

Making the pitch for safekeeping seems to be easier with new customers. While Bank of America has managed to get only 40 percent of its existing customers to accept the option, 75 percent of those opening new accounts have gone along with it, Keane reports.

Safekeeping has not arrived without some problems. One of them, says Alan Fox, legislative representative of the Consumer Federation of America, is that not all banks are speedy about getting out copies of checks.

``We've had complaints of some cases where it took several weeks to get one copy of a check,'' he relates. This could be a problem if another bank were expressing concern about a late mortgage or car payment, for example. You should be able to get copies in no more than three banking days, and the copies should be legible.

There have also been complaints, Mr. Fox notes, of the way people are added to the safekeeping rolls. At some banks, this won't happen unless you specifically authorize it. At others, including Bank of America, a ``negative authorization'' system is used. Here, if you do not respond to the two or three letters the bank sends asking whether you want safekeeping, you will be put on it. Keane notes, however, that if you miss the letters from the bank, you can resume getting your checks with a phone call or letter.

Customers are also sometimes surprised to find that their monthly statements from the bank don't contain as much information as they expected, Fox says. Usually, the statement lists only the number of each check, the date the bank cleared it, and the amount. If you want to know whom a particular check was written to, you'll have to keep an accurate check register.

You had better be good about balancing your checkbook every month, because that check register will be the only way you can make sure the bank's statement of your transactions is accurate.

If you think you might want to try safekeeping, practice with it for a few months, using just your register and the bank's statement. It's also possible to try safekeeping for real and switch back with a phone call or letter.

If you have a question that would make a good subject for this column, please send it to Moneywise, The Christian Science Monitor, One Norway Street, Boston, Mass. 02115. No personal replies can be given by mail or phone. References to investments are not an endorsement or recommendation by this newspaper.

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