Float is the amount of money in the banking system that is momentarily recorded twice because a deposit or withdrawal takes some time to register. Usually, the processing of paper checks causes these delays. When a check is deposited, a bank credits the customer’s account. However, it takes some time to receive and register a check from the payer’s bank. The amount of the check “exists” in two locations, in the accounts of both the payer’s and recipient’s banks, until the check clears the account upon which it is drawn.
The float is effectively double-counted money a paid sum that, because of processing delays, shows up in both the payer’s and the payee’s accounts at once. Both individuals and businesses can benefit from a float by buying time or collecting interest before payment clears their bank. If using someone else’s money is involved, playing with float can cross the line into wire or mail fraud.