Understanding Check Holds: What You Need to Know

Have you ever deposited a check into your bank account, only to find that the funds are not immediately available? This can be frustrating, especially if you need the money right away to pay bills or cover other expenses. Banks sometimes place holds on checks, which can delay your access to the funds. In this blog, we’ll explore what check holds are, why they happen, how long they can last, and how you can avoid them. At O1ne Mortgage, we understand the importance of timely access to your funds, and we’re here to help you navigate these challenges. For any mortgage service needs, feel free to call us at 213-732-3074.

What Is a Check Hold?

A check hold, also known as a deposit hold, is a waiting period before you can access the funds from a check you’ve deposited into your bank account. Typically, the full amount of your deposit will be available within two business days. However, this timeline can vary based on several factors, including the amount and type of check, the issuing bank, and whether you deposit the check with a teller, at an ATM, or through a mobile banking app.

Banks and credit unions must adhere to a federal law known as Regulation CC, which governs when they can place a check hold, how long the hold can last, and how customers must be notified. Within this framework, financial institutions can set their own check hold policies. For instance, some banks may offer faster access to your funds for a fee.

Why Is My Check on Hold?

Banks place holds on checks to ensure that the check will clear. In most cases, the first $225 of a check will be available the business day after the check is deposited, with the remaining amount available the following business day. However, there are exceptions to this rule under Regulation CC. Financial institutions may hold your check longer if:

• Your account was opened within the past 30 days.
• A check was returned unpaid and you’re trying to re-deposit it.
• You deposit checks totaling $5,525 or more in a single day.
• Your account has a negative balance or has been overdrawn six or more times in the past six months.
• The bank or credit union has reason to believe the check won’t clear.
• You deposit a check at an ATM not owned by your bank or credit union.
• The check is deposited under “emergency conditions” such as a war, natural disaster, or computer system outage.

How Long Can a Bank Hold a Check?

Most check deposits of $225 or less become available the next business day after deposit. For larger deposits, any amount over $225 is generally available the business day after that. It’s important to note that Saturdays, Sundays, and federal holidays are not considered business days, even if the bank is open on Saturdays.

Regulation CC requires “next-day availability” for certain types of check deposits, including:

• Electronic payments (such as direct deposited paychecks)
• U.S. Treasury checks deposited in person to a teller or at an ATM owned by the bank
• Federal Reserve Bank, Federal Home Loan Bank, cashier’s, certified or teller’s checks, and state or local government checks deposited in person to a teller
• Checks drawn on the same bank where they’re deposited and deposited in person to a teller or at an ATM or night depository on the bank’s premises

Banks can hold checks longer than two business days if the time frame is “reasonable.” Here’s how long various types of check deposits may be placed on hold:

• Checks deposited into an ATM your bank doesn’t own: Up to eight business days after deposit
• Checks over $5,525: Up to seven business days after deposit
• Checks deposited into a new account: Up to nine business days after deposit
• Checks subject to other exception holds: Up to seven business days after deposit

Your bank’s cutoff time for deposits also affects how long a check hold may last. Each bank or credit union sets a cutoff time denoting the end of the business day. Deposits made after the cutoff time are considered to be made on the following business day. By law, 2 p.m. is the earliest cutoff time for deposits at a physical bank branch; noon is the earliest cutoff time for ATM deposits. There may be different cutoff times for checks deposited with your bank’s mobile app.

Financial institutions must notify customers of possible check holds by posting notices in places where customers make deposits (such as at ATMs or in the bank’s lobby). If your bank or credit union puts a longer hold on your check deposit, they’re required to notify you of the amount of the hold, the reason for the hold, and when the full deposit will be available. You’ll receive this notice in person if you deposit a check with a teller; otherwise, you may be notified by email, text message, within your mobile banking app, or by mail.

How to Avoid Check Holds

Check holds can disrupt your finances, leading to overdraft fees or nonsufficient funds fees. Fortunately, there are steps you can take to reduce the chances of a check hold or to minimize its impact on your bank account:

• Understand your account’s terms: Check hold policies may differ from one financial institution to another. Familiarizing yourself with your bank’s check hold rules will help you avoid unpleasant surprises after cashing a check. Look at your account disclosures or deposit account agreement documents.
• Opt for direct deposit whenever possible: Direct deposits must be accessible the business day after the bank receives them. In fact, many banks and credit unions make direct deposits available immediately.
• Deposit checks in person: A trip to the teller is typically the fastest way to get access to your deposit.
• Deposit checks before the bank’s cutoff time: Be aware of different cutoff times your bank may impose for in-person, mobile, or ATM deposits.
• Evaluate check hold times when choosing a bank: Before opening a new bank account, consider how quickly you can access check deposits.
• Sign up for overdraft protection: Overdraft protection covers transactions when your account is short of funds, which can minimize the negative impact of a check hold. Overdraft protection pulls money from a linked bank account or uses funds advanced by the bank. You’ll need to weigh fees for overdraft protection against the potential fees for overdrawing your account, and keep in mind that excessive overdrafts could lead to more check holds.
• Set up account alerts: Visit your bank’s website or mobile app to sign up for alerts via text, email, or push notification. Getting notified when a deposited check posts to your account or your balance drops below a certain amount helps keep you on top of your bank balance.

The Bottom Line

Being aware of your bank’s check hold policies will help you avoid running short of funds. If you’re thinking about opening a new checking account, consider the options available to you and how they align with your financial needs. At O1ne Mortgage, we are committed to helping you manage your finances effectively. For any mortgage service needs, don’t hesitate to call us at 213-732-3074. Our team of experts is here to assist you in navigating the complexities of check holds and ensuring you have timely access to your funds.

Remember, understanding and planning for check holds can save you from unexpected financial hiccups. Stay informed, take proactive steps, and choose financial institutions that align with your needs. Your financial well-being is our priority at O1ne Mortgage.