When you deposit a check into your account at a bank or other financial institution, it can take several days before your bank actually receives the money represented by the check. Consequently, banks can place a hold on your account to prevent you from spending money that your bank has yet to receive. However, federal Regulation CC limits the period of time that a bank or credit union can place a hold on check deposits. The rules apply only to checking accounts, not savings accounts.
It's important to understand your bank's policies on check holds and available balances to avoid overdrawn bank accounts from insufficient funds and painful overdraft fees.
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Treasury checks, other kinds of government checks, U.S. postal money orders, travelers checks, cashier's checks, certified checks and teller checks have next-day funds availability, but only if deposited into an account that belongs to the check payee.
Certain types of checks are next-day availability items, meaning your bank cannot place a hold on check deposits and must make funds available on the day after you deposit it. Treasury checks, other kinds of government checks, U.S. postal money orders, travelers checks, cashier's checks, certified checks and teller checks have next-day funds availability, but only if deposited into an account that belongs to the check payee. Additionally, if you deposit a check drawn from another account held by your bank into your account, then your bank cannot hold that check if the check writer made it payable to you.
Federal law requires banks and credit unions to make funds available the next business day for electronic payments such as payroll checks made by direct deposit. If you're depositing a check drawn on a local bank in the same Federal Reserve region as your bank, the deposited funds must be made available to you no later than the second business day after the date of the deposit.
Case-by-Case Check Holds
The Regulation CC case-by-case rule allows banks to place longer delays like two-day holds on next-day availability items when those checks are deposited into an account that does not belong to the payee. Other checks, such as personal checks and payroll checks, are also subject to these holds, although banks do have the discretion to waive them. However, on a case-by-case hold, the bank must make the first $100 of the check available on the next business day, so only funds in excess of $100 are subject to the two-business-day hold.
For checks that are written for amounts in excess of $5,000, banks use the case-by-case hold rule for the first $5,000 of the check amount; the remaining funds in excess of $5,000 are subject to an even longer hold, known as an exception hold. This means $100 of funds are made available the next day, and $4,900 of funds is held for two days.
Deposit Hold Exceptions
When you deposit a check that exceeds $5,000, your bank can place a hold that lasts for seven business days on the portion of the check that exceeds $5,000. The remaining funds are subject to the case-by-case hold, depending on the specific account agreement. On a new account, defined as one that has been opened for less than 30 days, banks can place a nine-day hold on the entire check, barring the first $100, which becomes available on the next business day.
If you're expecting a large deposit, you can speed up the clearance process by asking the payer to send the funds as a wire transfer or as a money order or cashier's check.
During emergency situations, like after an earthquake or during a war, no limits apply to hold times, as long as the bank can justify placing a hold. Such holds are often applied when a bank loses electricity or access to the computer network. Regulation CC only applies to checking accounts, and although most banks use the same hold times for savings and money markets, in theory, there are no limits on the hold times that banks can place on checks deposited into those accounts.
Common Check Questions
These are several FAQs about check holds:
Are Deposit Holds Normal?
Yes. Depending on the type of deposit, banks normally place a hold for a few days. However, Federal Regulation CC specifies limits on the amount of time banks can hold deposits.
What Happens if I Deposit a Check and Then It Bounces?
If you deposit a check that is later returned because it was fraudulent or had insufficient funds, your bank will reverse the amount of the deposit in your account and will likely add on a returned check fee. If you have already used the available funds from the deposit, the returned check reversal could create an insufficient balance in your account, and you would also incur an overdraft fee.