When depositing a check into your bank account, you may have noticed your available funds can differ from account’s actual balance. This happens because your bank or credit union has placed a hold on your check deposit.
Financial institutions do this to protect themselves. A hold is placed to make sure the check is not returned due to insufficient funds, forgery, closed accounts, or a stop payment. It typically takes a few business days for your bank to receive the funds from a deposited check.
In 1987, The Expedited Funds Availability Act was passed by the U.S. Congress to address the issue of how long financial institutions can legally hold your deposit before giving you access to your money. Financial institutions must also make their hold policies available to all their account holders and they must provide that information when someone opens a new account.
In 2003, Congress passed the Check Clearing for the 21st Century Act (Check 21) to help speed up the process and allow banks to transfer checks electronically. This allowed the Reserve Banks to reduce their number of paper check-processing offices from 45 in 2003 to just 1 in 2010. The result is that all checks are now considered “local” and can be processed quicker. This means decreased wait times for the depositor.
By law, a bank can hold a check for a maximum of 9 business days before you can withdraw the money. For most situations, your check deposit will be held for a maximum of 3 business days. The exact hold time depends on several circumstances, which we will cover below.
Checks for $5,000 and Less
For check deposits totaling less than $5000 in a day, the bank must make $200 available to you the next business day. The second business day, $600 must be available to you. The rest of the deposit must be available by the 3rd business day. Your bank or credit union’s check holding rules may differ, as these are the maximum times the law allows. For example, the policy of Wells Fargo, Bank of America, and Chase is to make 100% of most check’s funds available by the next business day.
If the total check deposits into one account on the same business day is over $5000, then $200 must available on the first business day, $600 on the second, $4800 on the 3rd, and the remainder must be available on the 7th business day.
Expedited Availability for Checks with Lower Risk
For some deposits, banks are required make the first $5000 available in one business day. Checks issued by the U.S. Treasury (such as social security or tax refunds), cashier’s checks, USPS money orders, checks issued by a state, city, county, or other municipality, checks from the same bank you are depositing into, and checks under $200 must have the first $5000 available the next business day.
Newly Opened Accounts
When depositing into a new bank account, open less than 30 days, the bank is allowed to hold checks for up to 9 days before making any funds available to you.
High Risk Exceptions
There are some exceptions to the general rules. If you have a history of NSF problems associated with your account or if the bank has a legitimate reason to doubt the check you are depositing is good (such as suspected fraud, or the issuing bank says the check will not clear), then your entire check can be held up to 7 days.
Direct Deposit, ACH, and Wire Transfer
Funds from non-check, non-cash deposits are generally made available for withdraw the same day.
Cash deposits given to a bank teller are usually available immediately. However, banks are allowed to hold cash deposits for a maximum of 1 business day.