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How long can a bank hold a check by law

how long can a bank hold a check by law

Most banks have hold periods for checks, but how long can a bank hold a check by law? Well, it depends on the type of check, your bank, and, of course, federal regulations. Keep reading for more information regarding bank holds and alternatives to depositing checks if you need to access money faster. 

What Laws Dictate Bank Hold Times? 

For some, checks may seem like an old-fashioned way to pay for things, but checks are still quite popular. In fact, over 21 million checks were written in 2021 alone!1 There are a few laws in place that determine the amount of time that a bank can hold a check. Here are the major laws that you should know about: 

Regulation CC

Regulation CC offers a guideline for banks for holding deposited funds, including checks. Banks are required to follow this regulation. It also states that banks and financial institutions must disclose to customers how long these holds will last. 

The Expedited Funds Availability Act (EFAA)

Under Regulation CC, The EFAA was passed in 1987 to take care of concerns that consumers had about how long a bank is allowed to hold funds. They have specific day limits for different kinds of deposits, including checks. 

Check Clearing for the 21st Century Act

The Check Clearing for the 21st Century Act passed in 2003, also under Regulation CC, enabled banks to send electronic checks to each other. This allowed many banks to offer new services to customers. 

A Timeline for Check Holds Allowed From Banks

The amount of time a bank can legally hold your check will depend on the type of check you are depositing and your deposit method. Under Regulation CC, banks must provide a reasonable period to make funds from a customer’s account available, which generally ranges from one to five business days. 

It shouldn’t be surprising that banks, like other financial institutions, operate during standard business days and hours—Monday through Friday from 9 am to 5 pm. Keep those hours in mind when you consider how long it will take to access your check funds. Here are the timelines for different types of checks that banks must follow: 

Personal Paper Checks Under $200

The most common type of check that most people have are personal paper checks. Here are the deposit wait times for the release of these checks when they are under $200, based on deposit type:

  • In-person at a Bank Branch— next business day.
  • In-network ATM — the next business day.
  • Night deposit — the next business day. 
  • Out of Network ATM — fifth business day. 

Personal Paper Checks Over $200

For a personal check over $200 when you deposit at a bank branch in person, through an in-network ATM, or through a night deposit, the first $200 will be available the next business day. The rest of the balance will be available on the second business day. While with a deposit with an out-of-network ATM, the funds will be available on the fifth business day. 

Mobile Checks

There will be limitations to the types of checks you can deposit via your phone, depending on the bank. Acceptable checks can have holds that range from immediate use to a second business day. 

Cashier’s Checks, Teller Checks, and Certified Checks

Cashiers, tellers, and certified checks are more secure than personal checks and are prepaid for. Here are the release times for funds with these checks:

  • In-person at a Bank Branch— next business day.
  • In-network ATM — second business day.
  • Night deposit — second business day. 
  • Out of Network ATM — fifth business day.  

Postal Service Money Orders, Local Government Checks, Federal Reserve Checks, and U.S Treasury Checks. 

These are checks issued by government agencies and are usually seen as very secure by banks and financial institutions. Here are the holds you can expect on these checks: 

  • Into a Bank Account in Person at a Bank Branch— next business day.
  • In-network ATM — second business day.
  • Night deposit — second business day. 
  • Out of Network ATM — fifth business day. 

Can There Be Additional Hold Times? 

Although the standard check deposit hold times usually go up to five business days, there are certain situations of reasonable cause where banks can increase the hold time for checks. Here are some of those scenarios: 

ScenarioDescriptionHold Time
Bank Accounts with Excessive OverdraftsIf your bank account has had several overdrafts in a short time, banks and other financial institutions can hold your checks.Several days (usually around seven)
Large Check Deposits Over $5,000For any checks deposits over $5,000, the first $5,000 will be available on the second business day, and any leftover amount will be available later.First $5,000: Second business day. Remainder: Seventh business day or later
Re-deposited ChecksRe-deposited checks are checks you will get back because they could not be deposited the first time. Insufficient funds can often be why this happens, and you will have to wait to deposit it again.Usually until the seventh business day
Emergency SituationsSometimes due to natural disasters, banks and other financial institutions may be out of commission. If you deposit a check, it won’t be processed until the bank can continue work and business.Varies, until the bank can resume operations
Potentially Uncollectible ChecksIf a bank thinks the check you are depositing is fraudulent, if it is post-dated, or your account does not have enough funds, you will have to wait for them to verify things.Seven days or more
New Account HoldersA financial institution may hold checks and other deposits for new accounts—usually accounts under 30 days old. Nine days or longer

Why Do Banks Hold Checks?

Banks hold checks for many reasons. 

  • To ensure that a check will be paid. Anyone can write a check; it won’t be until the check is deposited that the bank will know whether the issuer’s bank account has sufficient funds. 
  • To verify that the check is legitimate. Check frauds happen all the time, and it can take some time for financial institutions to verify information. Just like insufficient fund cases, they must confirm that the funds will be sent over before they can issue the funds. 

Faster Ways to Use Your Check

You should consider cashing your check at an ATM or in person at your local bank if you need to access funds quicker than a deposit. You may even do this at your same bank, assuming you have sufficient funds available in your checking account and a valid Government-issued ID. Although cashing a check is fast, you may not have access to the full amount of the check right away. If you need funds sooner, quick cash loans, a personal loan, installment loans, or cash deposits may help.

Banks Holding Checks: FAQ

What is the legal definition of a check?

Legally, a check is a document that orders a bank to pay a specific amount of money from a person’s account to the person in whose name the check has been issued. In other words, a check is a written, dated, and signed instrument that contains an unconditional order directing a bank to pay a definite sum of money to a payee. 
Between the years 2017 and 2018, approximately 7% of all transactions in the U.S. were made with checks.2

Who is the payee?

The payee is the person or entity to whom the check is made out. In the context of a check, the beneficiary is the same as the payee.

Who is the drawer?

The drawer, or payor, is the person or entity who writes the check.

What is the difference between a check and a money order?

A check is a written order to pay that is connected directly to a checking account, while a money order is a prepaid piece of paper that acts like a guaranteed check.

What are the penalties for holding a check for too long?

If a bank holds a check for longer than allowed by law or its own policies, it may face penalties from regulatory bodies. The customer may also be able to take legal action.

What are the best practices for holding a check?

Best practices include depositing or cashing checks as soon as possible, keeping records of all transactions, and regularly reviewing your account statements.

What are the risks of holding a check?

Risks include the check becoming stale-dated (usually after six months), the account it’s drawn on not having sufficient funds when the check is finally cashed, and the check being lost or stolen.

What are the benefits of holding a check?

There are a few benefits to holding a check for the payee, as it’s usually best to deposit or cash it as soon as possible. For the payer, a check provides a record of payment.

What happens if a bank holds a check for longer than the legal limit?

If a bank holds a check for longer than the legal limit, it may be subject to penalties. The customer may also have recourse to complain or take legal action.

Are there any penalties for a bank that holds a check for longer than the legal limit?

Yes, a bank that holds a check for longer than the legal limit can face penalties from regulatory bodies and may also be subject to legal action from the customer.

What are the consequences for a customer if a bank holds a check for longer than the legal limit?

If a bank holds a check for longer than the legal limit, the customer may not have access to their funds when needed. This could lead to financial difficulties, such as bounced checks or inability to pay bills.

Can a bank refuse to cash a check if it is past the legal limit?

Yes, a bank can refuse to cash a stale-dated check, which is typically one that was written more than six months ago.

What can a customer do if a bank refuses to cash a check that is past the legal limit?

If a bank refuses to cash a stale-dated check, the customer can contact the person or company that issued the check and ask for a new one.

How can I make sure my check won’t be lost or stolen?

Keep your checks in a safe place, don’t leave them lying around, and don’t give out your checkbook to others. When mailing a check, consider using registered mail.

Who is the check made out to?

The check is made out to the person or entity named on the ‘Pay to the Order of’ line.

Who is the check from? 

The check is from the person or entity whose name and account number are listed on the check.

What are the consequences for a bank if they hold a check for too long?

If a bank holds a check for too long, it may face penalties from regulatory bodies and could potentially face legal action from the customer.

Where do I need to go to pick up the check?

Typically, you don’t need to pick up a check once it’s been deposited. The funds will be added to your account once the check clears. If there’s an issue with the check, the bank will usually contact you.

What is my bank’s funds availability policy? 

A bank’s funds availability policy is a set of guidelines provided by a bank that explains how long it takes for a deposit to become available in your account. Your bank’s funds availability policy may include the following: 
Same-day availability
Next-day availability 
Delayed availability 
Longer delays may apply: In some situations, such as if the bank has reasonable cause to doubt collectibility or if you have repeatedly overdrawn your account, the bank may delay availability for a longer period).
Holds on other funds (check cashing): If a customer cashes a check (instead of depositing it), the bank may place a hold on an equivalent amount of money that the customer already has in their account.
Holds on other funds (other accounts): If a customer deposits a check into one account and the bank places a hold on those funds, the bank may also place a hold on other funds in another account belonging to the customer.
Exceptions: Banks must notify the customer if they delay the availability of funds for any of these reasons and must tell the customer when the funds will be available.

The Bottom Line from CreditNinja

Banks will have unique holds for different check deposits, and they must follow federal guidelines for these holds. The average holding time ranges from the same day to five business days but can take longer, depending on different situations. Before choosing a bank to work with, it is essential to look for flexibility. And you will get all that information on benefits when you apply for a checking account. It will also be helpful to know that cash deposits and wire transfers are much faster, usually without hold times. Consider those options if you don’t want to wait for bank holds for available funds.

References: 

  1. Federal Reserve Payments Study (FRPS)
  2. U.S. Consumers’ Use of Personal Checks: Evidence from a Diary Survey
  3. Funds Availability And Your Bank Account: What You Need To Know

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