Why Did The Bank Place 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. 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.
Read on to learn more about checking account holds.
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. Oftentimes, the teller will call the bank that it 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, as a general rule of thumb, 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, they doubt the funds will clear. The bank should notify you if they have placed your account on hold.
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.
Can I Do Anything to Stop a Hold From Being Placed?
The most basic answer is no. The bank has the right to determine 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 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.
Updated by Rachel Morgan Cautero