What Is a Check Hold?
A check hold is the maximum number of days that a bank can legally hold the money from a check that's been deposited. The bank must credit the funds to the account of the party making the deposit after the check hold period has expired.
The check holding period is generally equal to the number of days it takes for the check to go through the bank's clearing cycle.
Key Takeaways
- The Federal Reserverequires that a bank hold most checks for a reasonable period of time before crediting the customer’s account.
- A "reasonable" period of time can range from two business days to up to six business days.
- A hold can also be placed if a bank has reasonable cause to doubt the collectability of the check.
- The portion of a deposited check that exceeds $5,525 can be held for two to five business days.
How Check Holds Work
The Expedited Funds Availability Act of 1987 (EFAA) mandated that local checks may be held for no longer than two business days. All checks in the United States were considered to be local after 2010. The two-day hold has been extended to five days as a reasonable limit for holding some checks.
The Federal Reserverequires that a bank hold most checks before crediting the customer’s account for no longer than a “reasonable period of time.” This is accepted as two business days for a same-bank check and up to six business days for one that's drawn on another bank. Financial institutions may hold on-us items for one business day following the deposit.
Many use the term EFAA Regulation interchangeably with (Reg) CC.
Banks may decide to place six types of holds on checks:
- Any amount that exceeds a $5,525 deposit can be held. This “remainder” must be made available within a reasonable time, usually two to five business days. Such deposits are considered large deposits.
- Checks that are redeposited may be held for a reasonable period of time, but the bank may not hold the check as being redeposited after it has corrected the deficiency if a customer returns the check due to a missing endorsem*nt or because the check was postdated.
- Banks can hold checks from funds that are repeatedly overdrawn. An account is considered to be repeatedly overdrawn if it's had a negative balance on six or more banking days during the most recent six-month period,or if the account balance was negative by $5,000 or more two times in the most recent six-month period.
- A hold can be placed if a bank has reasonable cause to doubt the collectability of the check. This is referred to as "doubtful collectability." It can occur with postdated checks, checks that are dated six months prior or more, and checks that the paying institution has deemed it won't honor. Banks must provide notice to customers of doubtful collectability, including the specific reason.
- A bank may hold checks that are deposited during emergency conditions such as natural disasters or communications malfunctions. These could prohibit the bank from functioning with its normal processes. A bank can hold such checks until conditions permit them to provide the available funds.
- Banks may hold deposits that are made into the accounts of new customers, defined as those who have held open accounts for less than 30 days. Banks can choose an availability schedule for new customers.
What Is Check 21?
Check 21 is theCheck Clearing for the 21st Century Act. Congress passed it in 2003 to accommodate checks that are processed electronically and to expedite the holding periods for these transactions.
What If My Bank Won't Tell Me How Long It Will Hold a Check I've Deposited?
Regulation CC provides that banks must post their availability policies on their premises at a location where customers who are making deposits are likely to see it.
Can Avoid Having Money Held When I Make a Deposit?
Banks can't hold cash or electronic payments, direct deposits, money orders, cashier’s checks, certified checks, teller’s checks, or state or local government checks. They also can't hold the first $5,525 of traditional checks that aren't in question because they're next-day items. Ask anyone who's paying you to use an alternate means of payment rather than a traditional check if you have concerns and want to ensure that you have access to the money right away.
The Bottom Line
Banks are permitted by law to hold the money for a period of time when they accept a check for deposit. The exact amount of time is determined by various factors, but it's typically based on how long it will take the deposit to move through the bank's clearing cycle.
It’s imperative that you understand when the money will be available to you if you deposit a check, particularly a large one. Commercial banks are obligated to disclose their hold policies to all account holders. The bank must provide its policy in written form if you ask for it.
FAQs
A check hold, sometimes called a deposit hold, is a waiting period before you can access funds from a check you've deposited in your bank account. In most cases, the full amount of your deposit will be available two business days after you deposit a check.
How does a check hold work? ›
What is a deposit hold? The amount of time a bank or credit union holds funds you deposit by check is sometimes referred to as a “deposit hold” or “check hold”. Some banks or credit unions may make funds available more quickly than the law requires, and some may expedite funds availability for a fee.
What are the different types of bank holds? ›
The four main types of deposit hold types are statutory, large deposit, new account, and exception holds.
What are hold limits in banking? ›
The Federal Reserve has set baseline rules for check deposits: The first $225 must be available the next business day, while amounts from $226 to $5,525 must be available within two business days after the deposit, and amounts of $5,525 or more generally should be accessible on the seventh business day.
How long can a bank legally put a hold on a check? ›
The Federal Reserve requires that a bank hold most checks for a reasonable period of time before crediting the customer's account. A "reasonable" period of time can range from two business days to up to six business days. A hold can also be placed if a bank has reasonable cause to doubt the collectability of the check.
How long does a check hold usually last? ›
How long will the hold on my deposited check be in place? Deposit holds typically range from 2-7 business days, depending on the reason for the hold. For deposits made on weekends, funds are considered deposited on Monday (the first business day), so the hold will go into effect the next business day (Tuesday).
Why is there a 7 day hold on my check? ›
One of the primary reasons banks hold checks is to validate them and ensure they're authentic and legitimate. They must ensure that the account from which the check is written has enough funds to clear the transaction (i.e., it's not an instance of check kiting).
How to get a bank to release a hold on a check? ›
Refer to your deposit account agreement for the bank's funds availability policy. If your bank is a national bank or federal savings association, and you believe it is holding your funds longer than allowed, file a written complaint with the Office of the Comptroller of the Currency's (OCC) Customer Assistance Group.
How long does a bank hold a check over $10,000? ›
“Large transactions usually have a hold period of two to seven days to verify the authenticity of the check and the ability of the payor to meet the obligation,” Thompson said. “A bank can make the hold longer under special circ*mstances, but that is fairly rare.”
How long can a bank keep your account on hold? ›
These hold times can vary by financial institutions but typically take between two to five business days. Federal regulations outline that certain check types must be available in one business day.
Generally, a bank must make the first $225 from the deposit available—for either cash withdrawal or check writing purposes—at the start of the next business day after the banking day that the deposit is made. The rest of the deposit should generally be available on the second business day.
How to avoid cheque hold? ›
Instead of using cheques, consider asking to receive your funds by direct deposit. With direct deposit, money can be sent to your account electronically. This will ensure that your funds are not held and that you can withdraw the money immediately.
How long does it take for a $30,000 check to clear? ›
Bottom line. In most cases, a check should clear within one or two business days. There are a few cases in which a check might be held for longer, such as if it's a large deposit amount or an international check. Make sure to review your bank's policies for what to expect in terms of check hold times.
Can banks override holds on checks? ›
Yes. Regulation CC provides six exceptions that allow banks to extend deposit hold periods. The exceptions are considered safeguards against risk.
How does holding a check work? ›
A check hold, sometimes called a deposit hold, is a waiting period before you can access funds from a check you've deposited in your bank account. In most cases, the full amount of your deposit will be available two business days after you deposit a check.
How long can someone hold a check without cashing it? ›
Personal, business, and payroll checks are good for 6 months (180 days). Some businesses have “void after 90 days” pre-printed on their checks. Most banks will honor those checks for up to 180 days and the pre-printed language is meant to encourage people to deposit or cash a check sooner than later.
How do you get rid of a hold on a check? ›
You can ask your bank to remove a check hold, but that doesn't guarantee the bank will comply. If the bank has reason to believe that the check may be fraudulent or that the check writer lacks sufficient funds to cover it, the hold may remain in place for the full window that's allowed by law.
When you deposit a check, is it available immediately? ›
Generally, a bank must make the first $225 from the deposit available—for either cash withdrawal or check writing purposes—at the start of the next business day after the banking day that the deposit is made. The rest of the deposit should generally be available on the second business day.
What happens if you deposit a check before the date? ›
Banks are permitted to pay checks even though payment occurs prior to the date of the check. A check is payable upon demand unless you submit a formal post-dating notice with your bank, possibly for a fee.
