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What to Know About Removing a Hold on a Bank Account

By Kelly Boyer Sagert · March 15, 2022 · 6 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

What to Know About Removing a Hold on a Bank Account

After making a deposit to a bank account, in many cases, not all of the money is immediately available for use. This temporary delay in the availability of funds is called a “hold.” When a particular deposit will become available depends on funds availability, and each financial institution has its own policies on this guided by federal regulations.

While these policies are in place for the bank’s protection as well as your own, it can be frustrating when you can’t spend your own money, which may lead you to wonder how to remove a hold on a bank account.

What Is a Hold on a Bank Account?

When a financial institution puts restrictions on an account holder’s ability to withdraw or otherwise use their funds, this is what’s called a “hold.” A hold typically lasts a relatively short amount of time, perhaps a day or two. If the restrictions go beyond five days, this may be referred to as an “account freeze.”

Financial institutions use the information in Federal Regulation CC to create their own holds policies. These policies usually provide information on the timing of funds availability based on the type of deposit being made, when it was made during a business day and the amount of the deposit.

Why Banks Place Holds on Money

Overall, a bank uses a hold to protect the institution from possible loss if the funds don’t clear from the institution where the money is being drawn. Basically, the bank wants to ensure that a check is legitimate and that it won’t bounce.

Financial institutions may also place holds if they suspect fraud and are investigating. This can in turn protect the account holder.

How Long Holds Last

The length of a hold depends on a number of factors, with deposits potentially clearing on the same day or in up to 11 days.

When it comes to a check deposit, the Federal Reserve requires that the first $225 must be made available to the account holder on the next business day (which doesn’t include weekends or bank holidays). Amounts from $226 to $5,524 should be made available within two business days after the deposit, and amounts over $5,525 should generally be available on the fifth business day. Banks may give you faster access, depending upon their policies.

In general, deposits going into a new account may have longer hold periods, which may be worth keeping in mind if you’re considering closing a bank account. Other reasons that could trigger a longer hold include:

•   An older check

•   A check that’s being redeposited

•   Deposits where an involved party has a history of overdrafts

•   Instances where there’s suspicion of fraud

Meanwhile, official checks like cashier’s checks, certified checks and government checks should clear on the day of deposit.

How to Remove a Hold on a Bank Account

As for how to remove a legal hold on bank accounts, you do have a few options, including reviewing your bank’s policy or contacting your bank. You could also simply wait it out. Here’s more on each of your possible options.

Wait It Out

If you’re not in a hurry to spend or transfer the funds being held, you can simply wait until the hold is taken off, given holds usually only last a matter of days. Keep in mind, however, that those days are business days — if there’s a bank holiday or a weekend coming up, your wait is bound to be longer.

Review Your Bank Policy

A notice of funds availability must be included on pre-printed deposit slips, but Regulation CC notes that it only needs to state that deposits may not immediately be available for withdrawal. So if you’d like to learn more specific information about the length of holds, you can often find your bank’s policies online or by contacting them. This information is also typically provided to you when you first open your account.

Armed with this information, you may be better able to plead your case with the bank to lift the hold — especially if you find out the hold is outside the norms.

Contact Your Bank

As a third option, call, email or stop by a branch of your bank to ask about specifics of its hold policy. You can ask your bank to provide an explanation for the hold or sometimes even to release the hold. In most cases, you won’t be able to do anything about the hold though, and because all banks have them, you can’t switch banks to avoid them either.

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How to Prevent Holds

Rather than worry about how to remove a hold on a bank account, it might be helpful to take proactive steps to prevent a hold in the first place. Read on for some suggestions for reducing or eliminating hold lengths in a variety of situations.

For Paychecks

If your employer offers it, sign up for direct deposit. This means that your paycheck will be electronically transferred through the Automated Clearing House (ACH), and these deposits usually clear more quickly — often becoming available the next business day. (Here’s more on the effect ACH payments have on deposits and how quickly they’re cleared.) Plus, many financial institutions make paychecks that are electronically deposited immediately available.

For Large Deposits

If you know that you’re owed a large sum of money, ask for it to be paid by certified check, cashier’s check or a form of government check (such as a money order purchased at the United States Post Office). These types of official checks typically clear quickly, usually by the next day. As another option, you could ask for the funds to be wire transferred.

Note that next-day availability only applies to the first $5,525 of the deposit, with the rest made available in a reasonable timeframe.

For Deposits in Person

Making your deposits in person is a good way to prevent delays in funds availability. Doing so through an ATM or through an app, on the other hand, can result in longer holds.

For Deposits Into a Separate Account

This strategy doesn’t help to remove a hold on bank account funds but it can help to prevent an overdraft due to a hold: Deposit funds that may come with a longer hold into an account that you don’t use regularly to pay expenses, such as your savings account. (Note that when funds are being held, you can’t transfer money to another bank from that deposit until it’s cleared.)

When Using Your Debit Card

When using your debit card, consider asking the merchant whether they intend to place a hold on your account and what the amount of that hold may be. Spots where “pre-authorization” holds can be common include hotels, gas stations and car rentals.

If you foresee the hold being an issue, consider paying with a method other than your debit card, such as a credit card, or transfer additional funds into your checking account to act as a buffer. It can also be helpful in this scenario if you’ve linked bank accounts.

The Takeaway

Financial institutions create hold policies for funds deposited into bank accounts under the guidance of the Federal Reserve. Holds generally are placed for two reasons: to ensure that funds are cleared and to protect the account holder when fraud is suspected. How long a hold lasts depends on a variety of factors, including the type of deposit, when the deposit was made, a bank’s specific policies and the age of the account, among others.

If you’re looking for a way to get your paycheck up to two days early, consider opening a new bank account with SoFi. The checking and savings option has no overdraft fees and offers access to over 55,000 ATMs.

Learn more about banking with SoFi today!

FAQ

Why is the bank holding my deposit?

In general, financial institutions place holds for two main reasons: First, they want to make sure that a deposit will clear as a way to protect themselves and, second, sometimes they’ll place a hold on funds because they suspect fraud and are taking actions to protect the account holder.

What can I do if my deposit is placed on hold?

You can check your bank’s hold policies (usually given to you when the account was opened and/or available on the bank’s website) to see if you can wait it out. Or, you can contact the financial institution for more information about your situation and to request for the hold to be lifted.

How long do I have to wait before my deposit is released?

In general, the first $225 of a non-cash deposit must be made available on the next business day. The next $226 to $5,524 must be available in two business days, and amounts over $5,525 must typically be made available on the fifth business day. There are exceptions in either direction though, and keep in mind that these estimated time frames only apply to weekdays, not weekends or bank holidays.

How long can a bank put your account on hold?

A bank hold can last anywhere from one day to 11 days. In general, however, holds last for less than five days. The exact length of a hold will depend on a number of factors.

Why is my bank account on hold?

Two common reasons for a specific deposit being on hold include the bank enforcing its holds policy to ensure that the deposit clears, or there is concern about fraud. If the entire account is frozen, contact your financial institution for specifics. Note that if you have concerns about identity theft or other forms of fraudulent activity on your bank accounts, you can consider a credit freeze or credit lock to protect yourself while the situation is being resolved.


Photo credit: iStock/RyanJLane

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