Why Did The Bank Put a Hold on My Checking Account?
If you've ever experienced a hold being placed on your checking account, you know how frustrating it can be. Not sure what it means? Essentially, a hold is a temporary delay in making funds available in your account.
A hold can be placed on your checking account for a variety of reasons. Usually, a bank places a hold on a check or deposit you make into your account. The bank will do this to ensure the funds clear before they are made available in your account. A hold is put in place to protect you as much as it protects the bank. If you spend the money you received from the check but it is returned to the bank and not paid, then you will have to cover the negative balance.
How Does the Bank Decide to Place a Hold on an Account?
If the check is particularly large, or if it is from out of state, then the bank is much more likely to place a hold on it. The teller will usually call the bank that the check is issued from to see if the funds are available.
A hold can last for several business days, and the amount of time the funds are held varies by bank.
However, smaller checks, those from in-state, checks from the same bank as yours, checks from the U.S. Treasury, direct deposits, and cashier's checks are generally available the next business day.
However, large checks ($5,000-plus), redeposited checks, and those going into frequently overdrafted accounts will often have longer hold times. This also applies to checks that the bank has "reasonable doubt" about – that is, if they doubt the funds will clear. The bank should notify you if they have placed your account on hold.
Keep in mind one thing when dealing with holds on funds in your checking account. Sometimes, the funds will show up in your checking account balance but they won't necessarily be a part of your available funds. You should always balance your checking account, and be aware of the differences between your account's actual balance and the available balance. They are two different things.
Why Do Banks Place Holds on Checks?
The most common reason banks put a hold on funds in your account is to ensure that a check clears. Putting it simply, they want to make sure they receive the appropriate funds before these funds are made available to you. Oftentimes why smaller checks take longer to clear is that they assume you will be able to absorb the cost of the check if it doesn't clear.
However, with larger checks, that might not always be the case. You can learn more about your hold by calling your bank and requesting more information or reading the guidelines you received when you opened the account.
How Long Will the Hold Last?
The short answer is, it depends. But generally speaking, cash deposits and the first $200 of a non-cash deposit will be available in one business day. Then, the rest of the deposit should be available the second business day, as long as there are no holds placed on the funds.
As mentioned, deposits like checks from the U.S. Treasury, direct deposits, and cashier's checks should be available the day after you deposit them. There are also exceptions to these rules, such as if you deposit more than $5,000 in your account in one day.
Can I Do Anything to Stop a Hold From Being Placed?
The most basic answer is no. The bank has some discretion in determining whether or not to release funds to you and when. Federal guidelines also dictate the timeline.
If you want to have a large transaction completed more quickly, you may ask for a direct deposit or that the money be wired directly to you instead of receiving a check.
You may also opt for ways to avoid a hold on your account. However, it is important to remember that the transfer of money between banks does not happen instantaneously. It takes time for the money to cross through the proper channels, so it's always best to give yourself a cushion when depositing checks.
HelpWithMyBank.gov. "Answers About Funds Availability." Accessed March 24, 2020.
Capital One. "Rules Governing Deposit Accounts." Accessed March 24, 2020.
FDIC. "FDIC Consumer Compliance Examination Manual — August 2018: VI. Deposits — EFA," Pages VI-1.6-VI-1.7. Accessed March 24, 2020.
Consumer Financial Protection Bureau. "How Quickly Can I Get Money After I Deposit a Check Into My Checking Account? What Is a Deposit Hold?" Accessed March 24, 2020.
First Internet Bank. "How Is My Available Balance Different From My Current Balance?" Accessed March 24, 2020.
Office of the Comptroller of the Currency. "Checking Accounts: Understanding Your Rights." Accessed March 24, 2020.