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Bank Accounts - Funds Availability


A friend wrote me a check to repay a small debt. The bank that the check is drawn on has released the funds, but my bank is still holding the funds. Can it do this?

Yes. Your bank may still hold the funds per its funds availability policy. Or it may have placed an exception hold on the deposit.

In many cases, if you know that the funds have been released by the paying bank, give this information to your bank and request an early release of your funds. If your bank is a national bank, and you believe it is holding your funds in excess of the time allowed, file a written complaint with the OCC's Customer Assistance Group.

If your bank is not a national bank, you should file a complaint with the appropriate regulator.

How long can the bank place a hold on government checks (e.g., social security and treasury checks)?

Generally, a national bank will make funds deposited into an account by a government check available for withdrawal not later than the business day after the banking day on which the funds are deposited into an account held by the payee of the check and in person to an employee of the bank.

Can the bank place a hold on a payroll check?

Yes. When funds become available for withdrawal primarily depends on the type of deposit. While all national banks are subject to the same maximum hold periods established by law, each bank may make deposits available sooner.

A bank can make the deposit available immediately or delay availability up to the maximum prescribed by law.

If your payroll check is a direct deposit, then national banks must make funds available for withdrawal on the payment date. This is the date on which funds are actually payable—not the date received by the bank.

Can the bank place a hold on deposits made in cash?

Yes, generally a national bank shall make funds deposited by cash available for withdrawal by the next day—or not later than the business day after the banking day on which the cash is deposited.

A business day is a calendar day other than a Saturday, Sunday, or a Federal holiday.

A banking day is a business day during which an office of a bank is open to the public for substantially all of its banking functions.

This holds true if the deposit is made in person to an employee of the bank.

The bank placed a hold on a cashier's check that later turned out to be fraudulent. Aren't cashier's checks supposed to be honored immediately?

Generally, cashier's checks must be made available by the next business day. However, because of the number of fraudulent and counterfeit checks now being passed, banks are beginning to place an extended hold on cashier's checks.

A bank can only place a hold on the amount of the check deposited in excess of $5,000. And the first $5,000 must be made available in accordance with the bank's normal availability schedule.

However, always remember that funds may become available to you before the bank has been able to verify the check. You may end up withdrawing the funds before the bank knows that the cashier's check is fraudulent.

If the cashier's check is fraudulent, the bank may charge the cashier's check back against your account or obtain a refund from you. In addition, you may want to review the Account Agreement you received when you opened the account, as it explains the availability process.

I opened a new checking account, but the bank will not let me withdraw my funds immediately.

The bank is following the rules established by the Expedited Funds Availability Act. When the bank is dealing with a new customer, it can hold onto the deposits longer.

In this scenario, an account is considered new for the first 30 calendar days after it was created. The account would not be defined as new if any of the customers on it had another established account at the same bank for at least 30 calendar days.

Different financial institutions have different availability schedules.

You may want to review your the Account Agreement you received when you opened the account. It should contain details on the availability process.

The bank placed a hold on a non-local check deposited into my account, but I need the money. Can I get the bank to release the hold?

Ask the bank if it will release the hold sooner. But keep in mind that funds become available for withdrawal depending on the type of deposit. Non-local checks generally have fifth business day availability. Generally, a national bank must make the first $100 from the deposit available on the next business day.

For example, if you deposit a $500 check, you can access $100 of that amount on the next business day, and the remaining $400 on the fifth business day.

You may want to review your Account Agreement with the bank, which explains the availability process.

A friend says that her bank never places a hold on her deposited checks. My bank always puts a hold on my checks. Aren't all banks supposed to use the same availability schedule?

While all national banks are subject to the same maximum hold periods established by law, each bank may make deposits available sooner. A bank can make the deposit available immediately or delay availability up to the maximum.

If you need funds from your deposit quickly, talk with the bank manager.

Are there exceptions to the funds availability (hold) schedule?

Yes. The regulation provides six exceptions that allow banks to exceed the maximum hold periods in the availability schedules. The exceptions are considered safeguards against the risk associated with each. These are the exceptions:

In the case of exceptions, the regulation provides that banks may extend the availability schedule by a reasonable period of time. Here are some examples:

Therefore, a local check that had an exception hold would generally have seventh business day availability. A nonlocal check that had an exception hold would generally have eleventh business day availability.

I re-deposited a check. Now the bank says that it has placed an exception hold on my funds. What does that mean?

The bank may use an exception hold on a check that was previously deposited but was returned unpaid for insufficient funds. This allows the bank to lessen the risk associated with this transaction.

An exception hold may not be applied to any check (including an “official type” check) that has been returned unpaid and re-deposited if the reason for the return was a missing endorsement or a post date and that reason no longer exists.

A local check that had an exception hold would have seventh business day availability. A nonlocal check that had an exception hold would have eleventh business day availability.

In addition, you may want to review your account agreement with the bank provided to you at the time the account opened, which explains the availability process.

When are direct deposits available for withdrawal?

National banks must make funds available for withdrawal on the “payment date.” This is the date on which the funds are actually payable, not the date on which the bank received the deposit.

I deposited $10,000 to my account. When will the funds be available for withdrawal?

For deposits in excess of $5,000, banking laws and regulations allow for exceptions to the availability of funds. Exception holds include deposits over $5,000 which may be applied to any deposit of checks (including official checks) to any and all account(s) where the aggregate amount of the checks deposited on a banking day exceeds $5,000.

The hold may be placed only on the amount deposited in excess of $5,000; thus, the first $5,000 must be made available consistent with the bank's normal availability schedule.

When the large deposit exception is applied, the bank may extend the time periods established under the availability schedule by a reasonable period of time. According to the banking regulations, reasonable periods of time include an extension of up to five business days for local checks and six business days for non-local checks. However, under certain circumstances, a longer extension may be reasonable.

In addition, the account agreement you received when you opened the account should explain the availability process.

What is the cut-off time for deposits?

National banks may establish different cut-off hours for different types of deposits, as well as for deposits made at different locations.

I deposited a local check. When will my funds be available/released from the hold?

When funds become available for withdrawal depends primarily on the type of deposit.

A local check (drawn on banks located in the same check-processing region as the bank in which you made the deposit) has second business day availability. Generally, a national bank must make the first $100 from the deposit available—for either cash withdrawal or check-writing purposes—at the start of the next business day.

For details, take a look at the account agreement you received when you opened the account—it explains the availability process.







Copyright 2007 by Mark McCracken , All Rights Reserved