When you deposit money into your bank account, those funds are not always immediately available for use. Your bank or credit union may place a hold on the deposit, and you may notice that your “available” balance is lower than the total balance of your account.
Each bank has its own policy about how long deposits take to become available. There are also federal regulations about how long banks can hold on to funds before making them available to their customers.
It can be a good idea to understand your bank’s policies on holding deposits in order to make sure you don’t accidentally overdraw your account.
Below are some key things you may want to keep in mind to make sure you have access to cash when you need it.
Why Do Banks Put a Hold on Deposits?
Banks hold deposits to protect themselves, as well as their customers, from losing money. If a check you deposit bounces or some other complication arises, the bank will have an opportunity to fix the problem before you have the opportunity to spend the funds.
While a delay in being able to access your own money may seem like a nuisance, holds can actually help protect you from fraud and fees.
If your bank allows you to spend funds from a check that later bounces, you would have to repay the bank the amount that they gave you, and likely also get hit with a hefty overdraft fee. This is the case regardless of who is at fault.
How Long Can a Bank Hold a Deposit?
The amount of time it takes for funds to become available can depend on a number of factors, including how long you’ve held your account, your financial history, the type of deposit (e.g., cash, check, direct deposit), and the amount of the deposit.
Generally, a bank or credit union has until at least the next business day (a business day is a weekday that is not a holiday) to make most deposits available.
Electronic deposits are typically available on the same day. So, one way to make sure your paycheck is available to you quickly is to sign up for direct deposit.
The longest a bank can hold funds is usually five business days for money deposited at an ATM of a different bank.
While each bank or credit union has its own rules as to when it will let you access the money you deposit, federal law establishes the maximum length of time a bank or credit union can make you wait.
Recommended: How Long Does a Direct Deposit Take?
Below are the rules set by the Federal Reserve .
• Direct Deposit: Day of Deposit
• Wire Transfer: Next Business Day
• First $200 of any non-”next-day” check deposited: Next Business Day
• Cash*: Next Business Day
• U.S. Treasury Check: Next Business Day
• U.S. Postal Service Money Order*: Next Business Day
• State or Local Government Check*: Next Business Day
• Casher’s, Certified, or Teller’s Check*: Next Business Day
• Checks and Money Orders Drawn on Another Account at the Same Financial Institution: Next Business Day
• Federal Reserve Bank and Federal Home Loan Bank Checks*: Next Business Day
• Any Other Checks or Non-U.S. Postal Service Money Orders: Second Business Day After the Day of Deposit
• Deposits of Items Noted by “*” at an ATM Owned by the Customer’s Financial Institutions: Second Business Day After the Day of Deposit
• Deposits Made at an ATM Not Owned by the Customer’s Financial Institution: Fifth Business Day After the Day of Deposit
* Deposited in person
You may want to keep in mind that the hold times listed above are the maximum allowed. It’s possible that your funds will be available sooner.
You can typically find specifics about your bank’s funds availability policy in the account agreement you received when you opened your account, or you can ask the bank for a copy of their holding policies.
Understanding Cut-Off Times
When you deposit a check, you may think you did it “today.” However, you may have missed the cut-off for starting the deposit process on that calendar day.
If you make a deposit after the cut-off time, your financial institution can treat your deposit as if it was made on the next business day. If the deposit was made late in the day on a Friday, it could actually take three or more days for the money to show up in your account.
By law, a bank or credit union’s cut-off time for receiving deposits can be no earlier than 2:00 p.m. at physical locations and no earlier than noon at an ATM or elsewhere. Sometimes banks have later deposit times for mobile deposits (made via the bank’s phone app), such as 5 pm.
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Deposits That May Take Longer to Become Available
There are certain circumstances under which banks are allowed to hold deposited funds for longer than the times listed above.
When these exceptions apply, there isn’t always a clearly defined limit to the amount of time the bank can hold funds. The bank can generally hold funds for a “reasonable” amount of time.
Exceptions to standard holding times include:
Large Deposits
If a customer deposits more than $5,000, the bank will typically need to make the first $5,000 of the funds available within one business day, but they are allowed to put a longer hold on the remaining amount.
Redeposited Checks
If a check bounces and then is redeposited, banks may hold the funds for longer than one business day. (You may want to be cautious about accepting future checks from a person or business that has already bounced a check.)
Accounts That Have Been Repeatedly Overdrawn
If a customer has a history of overdrawing their account, the bank may hold funds for more time before making them available for use.
Repeatedly overdrawn means that the account has had a negative balance on at least six business days within the past six months, or the account was $5,000 overdrawn more than twice within the past six months.
Reasonable Doubt
If a customer deposits a check that seems suspicious, the bank may hold funds for a longer period of time. A check may seem suspicious if it’s postdated or it’s more than 60 days old.
New Bank Accounts
If your account is less than 30 days old, you may experience hold times of up to nine days. Official checks and electronic payments, however, may be partially available the next day.
Emergency Conditions
If there is a communications outage, a natural disaster, or another circumstance that impedes normal bank functions, banks can hold funds until they are able to provide the funds.
The Takeaway
When you deposit a check, you naturally expect the money to show up in your bank account. But there may be a delay between the time you deposit money and the time that those funds are actually available for you to spend.
Banks generally make funds available on the business day after you make a deposit, but there are exceptions.
Direct deposits are typically available sooner, and some checks, such as those larger than $5,000 or older than 60 days, can take longer than a day to clear. If your account is brand new, it may take up to nine days for a deposited check to become available.
Knowing your financial institution’s policies about holding times can help ensure that you’re able to pay your bills on time, have access to cash when you need it, and don’t get hit with overdraft fees.
Leveraging Technology
If you’re looking for an easy way to access and manage your money, you may want to consider signing up for SoFi Checking and Savings®.
SoFi Checking and Savings is a mobile-first checking and savings account that allows you to earn competitive interest, spend and save–all in one place. And, it’s simple to add your SoFi Checking and Savings account as an option for your direct deposit.
3 Great Benefits of Direct Deposit
- It’s Faster
- It’s Like Clockwork
- It’s Secure
As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.
Whether your check comes the first Wednesday of the month or every other Friday, if you sign up for direct deposit, you know when the money will hit your account. This is especially helpful for scheduling the payment of regular bills. No more guessing when you’ll have sufficient funds.
While checks can get lost in the mail — or even stolen, there is no chance of that happening with a direct deposit. Also, if it’s your paycheck, you won’t have to worry about your or your employer’s info ending up in the wrong hands.
Photo credit: iStock/solidcolours
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