Why does it take so long for an out of state check to clear?

Answer 1

It takes so long because the check has to be CASHED at your bank first.

The check must then be MICR encoded at the bottom with the the dollar amount of the check to prepare the daily batch of checks to be remitted to the Federal Reserve Banking system. Typically, this encoding of checks happens at a "Proof Department" located in one of the bank's central operations centers. The MICR encoding also facilitates the processing of the checks by high-speed computers.

The check (which becomes part of a very large batch) is then couriered to the Federal Reserve Bank System closest to the bank you cashed it because the Federal Reserve Bank is the "clearing" agent between two banks.

The Federal Reserve Bank reads the routing numbers and amount of the check and records information to send the check to the "out-of-state" bank. The "out-of-state" bank receives the check in its daily batch of "cleared" checks from the Federal Reserve.

The "out-of-state" bank must then process your cashed check in their banking system. As a result, the bank must then run this check through their high-speed computers to "clear it" and remove the amount of the check from the depositor's available balance.