Avoid a Hold on Your Checking Account

Check book
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If you have ever tried depositing a large check at your bank, you may have experienced the bank placing a hold on the funds.

It can be frustrating to not have access to your money right away. But it's important to realize how holds work—and why they exist.

When You Might Get a Hold

When you make a deposit, the money is not credited to the bank right away. It must go through a central clearinghouse operated by the U.S. Federal Reserve Bank before the bank receives credit and gives you the money. While some payments are pushed through right away, there are certain transactions that may require a temporary hold on the funds in your account 

Any check deposit might cause the bank to place a brief hold on your account, but some types of checks have a higher likelihood of holds.

Your bank may put a hold on the following types of checks:

  • Insurance settlement checks: Insurance settlement checks are commonly returned or disputed. For this reason, they may cause an automatic flag for a hold even if the amount is quite small. If you are depositing this type of check, be prepared to potentially have a hold placed on the check and to give it a few days to process through the bank.
  • Large checks: Checks that are for large amounts usually have a hold placed on them. That's so that the bank can protect itself from lost funds if the check doesn't clear. If your check is for at least $5,000 or more, expect a hold to be placed on the check until it clears. This is particularly true if you don't have a significant amount of money in the bank (i.e., enough to cover the check) or if the check is a personal check as opposed to a business check.
  • Out-of-state checks: Checks from out-of-state banks may also trigger a hold. These holds may be longer than the other types of holds because the bank will have to wait a bit longer to collect the funds from the other bank since it's located out of state. These holds may be placed for up to 10 business days.

You may be more susceptible to holds on your funds if your account was recently opened, or if you've had a lot of overdrafts or returned checks.

Once a hold has been placed on your account, you will need to wait for the money to be released to you. The bank usually puts a blanket hold in place that may potentially last up to 5-10 business days. You can call the bank after a few days to see if the money has been collected and if the bank will release the hold early. Be sure to speak to a representative and not refer to the balance shown on an ATM statement.

Every bank has its own policies, and banks can also place temporary holds on cashier's checks and cash deposits, so keep that in mind, as well.

How to Handle a Hold on Your Account

When you have a hold placed on your account, you might feel frustrated, especially if you need the funds right away. Unfortunately, the teller or customer service representative who is helping you cannot change the bank's policy.

If you want an exception to the policy, you will most likely need to speak to the manager. Generally, they will not make an exception unless you have been with the bank for an extended period of time and you have quite a bit of money in the bank. However, they may be able to make a portion of the deposit immediately available to you.

How to Avoid an Account Hold

It is important to consider ways that you can avoid the account-hold situation completely. One of the things that you can do is to have the money transferred via the ACH directly to your account. Many businesses can do this, and it really depends on who is paying you the money and the reason for it.

Before you accept a large check, you may want to see if an ACH transfer is an option instead.

You may also request a cashier’s check, which consists of guaranteed funds, although the bank may still place a brief hold on those funds, as well.

Remember, Holds Protect You

Although it can be frustrating to not have immediate access to your money, it is important to realize that the hold is protecting you, as well. If the check does come back and you have already spent all of the money, then you will have to pay it back. This can overdraw your account and cause other payments to bounce. 

If the check is for a large amount it can be difficult to come up with the money quickly, or you could even end up damaging your credit as a result of a returned check. That's why it's wise to ensure the funds have cleared your account before you begin spending them.

Updated by Rachel Morgan Cautero.

Article Sources

  1. Federal Reserve System. "Check Services." Accessed Feb. 4, 2020.

  2. Federal Deposit Insurance Corporation. "Expedited Funds Availability Act," Page 6. Accessed Feb. 4, 2020.

  3. The Federal Reserve Board. "A Guide to Regulation CC Compliance." Accessed Feb. 4, 2020.

  4. Office of the Law Revision Counsel of the United States House of Representatives. "12 USC Ch. 41: Expedited Funds Availability." Accessed Feb. 4, 2020.

  5. Consumer Financial Protection Bureau. "How Quickly Can I Get Money After I Deposit Check Into My Checking Account? What is a Deposit Hold?" Accessed Feb. 4, 2020.

  6. Federal Reserve Board. "Examples of Applying Funds Availability Rules." Accessed Feb. 4, 2020.

  7. Federal Deposit Insurance Corporation. "FDIC Law, Regulations, Related Acts: 6500 Consumer Protection." Accessed Feb. 4, 2020.

  8. Office of the Comptroller of the Currency. "Answers About Funds Availability: Direct Deposit." Accessed Fed. 4, 2020.

  9. Office of the Comptroller of Currency. "Answers About Funds Availability: Cashiers Checks." Accessed Feb. 4, 2020.