How Long Can a Bank Hold Your Check?

By Jill Terry

Why does a bank place a hold on a deposited check?

To a bank, certain deposits are riskier than others. Where the check originates, who it's from, how much it's for--each of these factors plays a role.

Regulation CC (Expedited Funds Availability) assigns check hold periods according to a deposit's type and origin. The law establishes maximum hold periods--a bank is free to hold a deposit for less time than the regulation stipulates but never for a longer time. Ask for a bank's availability schedule to see what kind of hold times you can expect (this information should be given to you when you open an account).

What's in Your Deposit?
You should be able to write checks on cash that's deposited to your account no later than the next business day (note: if you don't make the deposit in person, the bank can wait until the morning of the second business day following the deposit to make the funds available to you). Electronic payments, like paychecks that get automatically deposited to your account, have to be available to you on the next business day after deposit. Other types of deposits that have next-day availability include:

Checks drawn on the U.S. Treasury and deposited into an account held by the payee.
U.S. Postal Service money orders (deposited in person and into an account held by the payee of the money order).
Federal Reserve Bank and Federal Home Loan Bank checks (same stipulations as the U.S. Postal Service checks).
State or local government checks (deposited in person and in the same state where the check was issued).
Cashier's, certified, or teller's check (deposited in person and into an account held by the payee of the money order).
Checks drawn on and deposited into the same or another branch of a bank as long as it's in the same check-processing region as the deposit.

If you have a deposit that doesn't fall into these categories (and most deposits don't), banks have to make the first $100 of the total deposit amount available to you on the next business day.

What's the Origin of Your Deposit?
Banks used to claim that out-of-state checks took a long time to clear, so they'd put excessive holds on them. In 1990, Regulation CC recognized that advanced check processing systems made holds based on geography increasingly unnecessary. Today, a check can only be categorized as "local" or "non-local" with clear processing times for each.

Local: A local check is one that is drawn on a bank within the same check-processing region. There can be several regions in one state, and one region can comprise more than one state. State lines are largely irrelevant in determining a check-processing region. A bank cannot hold local checks for more than a day--the funds must be available to you by the morning of the second business day after the day of deposit.
Non-Local: Non-local checks are drawn on banks outside the check-processing region where the deposit is being made. These funds must be available to you by the morning of the fifth business day after the day of deposit. Beware--deposits of cash or checks made at ATMs not located at the bank with which they're affiliated can be held as long as non-local checks.

Caution to new account holders: banks can impose many inconvenient holds on accounts that are less than 30 days old, so if you move to a new town, keep your old account open for at least 30 days (while your new one "ages") so that you're guaranteed to have access to your money.

How Much Can You Have?
The entire amount of a check is not always what's held. A bank is free to tier the availability of your deposited funds.

Most of your deposits will not fall into the categories listed above in the next-day availability section because they are probably checks written to you by private individuals or companies. For these types of checks, two basic rules apply. These below are just a sample. You need to check with your bank to find out the rules they are currently following since banking legislation often changes.

Banks have to make the first $100 of these "private" checks available to you on the next business day after deposit. So if you deposit a $500 local check on Tuesday, the bank has to make at least $100 available to you by Wednesday morning. It can release the remaining $400 to you on Thursday--the second business day after deposit since it is a local check and can be held until the second business day (see above).
For deposits over $5,000, the bank must comply with the $100 next day availability rule, but then it gets a little more complicated. The next $4900 has to be made available according to whichever local or non-local rules it is subject. Then, the amount of the deposit exceeding $5,000 can be held for as long as 11 days after your initial deposit (10 days if it's a local check).

Quirky Bank Definitions
A bank counts days based on how it defines its business hours. Banks can establish their own cut-off times, which means that a deposit you make at 2:30 p.m. at one bank might be considered made on that day, but that same deposit at another bank might be added to the next day's activity. Read the signs that are required to be posted at ATM machines and bank lobbies--they will tell you the bank's cut-off times for deposits and give you some idea of when your deposit will be available.

Final Note
As with most government regulations, there are more exceptions than rules, so be sure to do your own research if you suspect your bank is not following the law. Regulation CC is available to you at the Federal Reserve Bank's Web site. If you'd like more information about how checks get processed, visit the Federal Reserve Bank of Atlanta's page.