Checking Account Holds
How to Prevent and Remove Them
When you see money in your checking account (especially after making a deposit), you might think you can spend that money right away. But banks often place "holds" on your deposits, preventing you from using the money. As a result, you may end up bouncing checks or having problems with automatic payments that get deducted from your account.
What Is a Hold?
A hold is a temporary delay in making funds available. The bank “freezes” funds so that you cannot withdraw the money or use it for electronic payments, but those funds appear in your account.
If your account pays interest, you'll typically start earning interest right away—even if the funds are unavailable.
Your account history shows all deposits, and the bank adds deposits to your account balance, but the money is not part of your available balance.
The key word above is “available.” You have several account balances, including your total account balance, and your funds available for immediate spending.
Why Banks Hold Money
Money does not move as quickly as you'd think. When you deposit a check or money order into your checking account, the bank credits your account immediately (showing an increase in your balance). However, that money still needs to move over from the paying bank. That transfer process may take several days, and your bank doesn't know for sure if the payment will clear.
Banks are concerned that checks written out to you could bounce, or that those checks are not legitimate. A hold on the deposit gives the bank a few more days to find out if anything is wrong.
When placing holds, banks protect themselves against losses, and those holds can also help you avoid expensive mistakes (see below).
How Long Holds Last
In some cases, banks do not put any hold on deposits—you can spend the money immediately. It’s common for holds to last for several business days, and the type of deposit is important.
Banks are allowed to be as generous as they want when making funds available. They can let you walk away with cash immediately when you make a deposit, but deposits typically receive a hold for several business days. Remember that business days are Monday through Friday, excluding holidays, so five business days means seven calendar days (or more, if there’s a holiday).
Federal law (the Expedited Funds Availability Act) limits how long banks can hold your deposits.
When you deposit cash in person to a bank employee (as opposed to at an ATM), the funds must be made available within one business day.
The rest of the rules below apply to non-cash deposits.
The first $200 of your deposit must be available within one business day. The remainder should be available by the second business day (unless an "exception" applies).
“Official” deposits are generally available within one business day. When you deposit more than $5,000 of checks in one day, the first $5,000 should be available within one day, but there may be a hold on the remaining amount. Official deposits include:
How to Remove a Hold
It's frustrating when you can't spend your own money, and banks usually set holds by policy. A computer system follows a series of rules for all checks as opposed to singling you out. It is possible to get a hold removed, but you may have to plead your case.
What Caused It?
First, find out why the hold exists. For example, you might have deposited a Western Union money order for something you sold online. That’s essentially a check deposit, subject to standard hold times. Alternatively, your funds could be frozen because you used your debit card at a business that set a substantial preauthorization hold.
Ask to Have It Cleared
If a merchant placed a hold on your account through your debit card, contact the merchant and ask them to release the funds. Those holds should fall off after several days, but they are especially problematic with hotels, rental cars, and gas pumps (and other situations where your final bill is unknown when you swipe your card). If your bank places a hold on a personal check you deposited, ask if it's possible to remove the hold. Perhaps the funds arrived from the paying bank, and there is no more risk to the bank.
Your bank might be willing to speed things up, especially if you don't have a history of bouncing checks or making bad deposits.
Wait It Out
In some cases, you won't be able to do anything about a hold. Again, your bank needs to follow federal regulations and justify any holds in your account, so they can't keep you from your money forever. If things go on for too long, contact the U.S. Consumer Financial Protection Bureau (CFPB) and file a complaint.
How to Prevent Holds
To avoid holds in your account, make deposits that are likely to become available as soon as possible.
For your paycheck, sign up for direct deposit. Electronic transfers (especially those that occur regularly, like a payroll deposit) tend to clear quickly. You might even have access to your money one or two days early. Some banks accelerate those deposits, and you don’t need to physically get your paycheck to the bank.
For large deposits, ask for a form of payment that clears quickly, including:
- Wire transfers are often available within one day.
- Cashier’s checks, USPS money orders (but not other money orders), and certified checks can provide up to $5,000 within one business day.
Deposit in person with a bank employee. Deposits at ATMs or through your mobile device might take longer to clear.
Deposit to a separate account if you’re making a deposit that is likely to cause problems. For example, if you have multiple checking accounts and you need to deposit a large out-of-state or foreign check, make the deposit into an account you don’t rely on for everyday use.
When using your debit card, ask if the merchant will place a hold on your account, and find out how much it will be. If the amount is large enough to cause problems, use a credit card instead or transfer extra money into your checking account to cover the hold. Be careful about swiping your debit card at gas pumps, hotels, and restaurants, where these "pre-auth" holds are most common.
The Whole Account Is Frozen?
In some cases, banks freeze your entire account—even money that was already available in your account before making a substantial deposit. Computer programs might determine (for a reason that won't be explained to you) that there's a risk and your funds need to be frozen temporarily. Again, a phone call might be able to free up at least some of the money.
The money you can spend in your account is often called your available balance. Unavailable funds should appear under your held balance.
The best way to avoid inconveniences is to talk with a banker while you’re opening an account and making large deposits. Describe exactly how you plan to use the account: How often you’ll deposit and withdraw, the typical size of transactions, and the source of funds. A good banker will recognize account features that will make you a happy customer.
Over time, your bank (and its computer systems) should get accustomed to how you use your account. If you frequently travel or make deposits and withdrawals, the bank should eventually figure out that you are not doing anything wrong and reduce the severity of holds in your account. Banks use complex risk scores and computer models to prevent fraud, and you need to train the bank on what to expect in your accounts.
You're Responsible for the Money
After a hold ends, you're free to use the money: Withdraw cash or spend money using your debit card, checkbook, or payment app linked to your checking account. However, you're still responsible for the deposit—by clearing a hold, the bank does not guarantee that a check or money order you received was good. In other words, holds protect the bank, and you spend money at your own risk.
Sometimes it takes several weeks to find out if a check will bounce. If you've spent the money from a deposit, you'll have a negative account balance, and you'll have to replace those funds. That’s hard to do, especially if you sent cash to somebody you don’t know (as happens in the classic cashier's checks scam).
If you have any doubts about a deposit, proceed with caution. Try to verify funds with the check writer’s bank (or with a money order issuer) before you make a deposit. Doing so can help you avoid fees for depositing bad checks at your bank.
Wait at least several weeks before you spend money from a suspect deposit—especially if anybody asks you to send the funds somewhere else, which is a sign of a scam.