What is a clean float?

In banking and finance, the term float concerns the temporary inaccuracy of the bank balance in the account that occurs as a result of the period between the stored check and when the bank issuing this deposit. During this latent period, both banks demand ownership of funds. The bank account may have payment of the payment, the money spent that the bank has not yet removed out of the account, and the collections are causing money that the bank has not yet cleaned into the account. A clean float is the sum of two types of floats on the account. The account holder can calculate the exact bank balance by adding a network float from the previous account balance.

For example, the Joe's Hot Dog stand has a previous account balance in the USD in the US (USD). Joe wrote three checks, a total of $ 2,000 that did not clean the bank. He imposed some checks in the total amount of $ 3,000, which did not clean his account. The net float for the account is Coltulated by deducting the float payout, $ 2,000, out of $ 3,000 USD collections, which provides a net float of $ 1,000. SteadySome Joe's Hot Dog has $ 11,000, the sum of the net float and the previous balance.

Before electronic banking and debit cards, several banks would be illegally involved in the ball control, a practice that earns a float. The customer would write a check for more money than it contained his account. Just before the check would clean up, which would result in a pumped account, the customer would insert a check from another account to a pumped account, again with non -existent funds, or make a actual deposit on the account. If he is convicted, he can be fined up to $ 1 million and sentenced to up to 30 years in prison. Cleaning the control for the Act of the 21st Century, adopted in October 2004, and the processing of checks between banks, increasing the probability of bouncing controls, unless the funds are available immediately to cover the check.

although bAnky can receive funds electronically soon after the deposit, the funds are not available for use by the account holder until the next day. This money called a negative float, the bank can invest overnight in generating income for the bank. Although the Act on the check of the check for the Act of the 21st Century accelerated the processing of checks, it did not accelerate the bank's process to make the deposited funds available.