When you receive a check, you may want to deposit it into your checking account and spend your money quickly. However, a financial institution may place a hold on a deposited check. Learn why it takes time for funds to clear and when you can expect banks to release deposited funds.
How Quickly Can I Get Money After I Deposit a Check Into My Checking Account?
The amount of time it takes for a financial institution to clear a deposited check depends on their hold policies and your deposit method. However, the average time for a bank to process a check is two business days.1
Each bank or credit union has a cutoff time that signals the end of a business day. The bankrolls any deposits made after that specific time into the next business day. Suppose you deposit $400 on Monday after the cutoff time of 3:00 p.m. In that case, the bank will consider the money deposited on Tuesday.
The cutoff time for deposits varies, but there are federal laws that financial institutions must follow. For example, the cutoff time for a physical branch location cannot be earlier than 2:00 p.m. And the cutoff time for an ATM deposit cannot be earlier than 12:00 p.m.
Deposit a Check in Person
Suppose you deposit a check worth less than $200 in person. In that case, you can generally expect to see the money in your available balance within one business day. But when a physical deposit totals more than $200, it can take as much as two business days to make your money available.
It’s possible to get your money by the next business day if you deposit certain types of checks in person. A bank employee can quickly process a certified check, a government check, or a check from one personal account to another. If you request money and need it fast, asking for a certified check may be better than a personal check.
Cash Deposit at an ATM
Suppose you have cash and want to deposit that money into your checking account. In that case, you may think the money will be available immediately. But that is not the case! If you deposit cash at an ATM, you will likely have to wait at least one full business day before cash deposits can be withdrawn or used.
Direct Deposit
Electronic transfers have already been cleared, such as a mobile deposit or direct deposit into a checking account. This means you do not have to wait long before that money shows up as available funds in your bank account. Electronic deposits with checks and loans—such as payday loans, personal loan options, and fixed rate loans—can be withdrawn by the second business day. Direct Deposit continues to be the overwhelming choice for Americans to receive their wages.2
Deposit Check at an ATM
Is it possible to cash a check at an ATM? Yes! You can safely deposit cashier’s checks, certified checks, and teller checks at any ATM. If you make a deposit at your bank’s ATM, you can expect money from your deposited checks by the second business day. Using an ATM that does not belong to your bank will prolong the Bank verification process. You may have to wait five business days before your deposit clears.
Why Is the Bank Holding My Check?
Have you ever made a deposit into your bank account and been disappointed when you discovered that your money was unavailable? Why is there a waiting period at all? Banks have the authority to place a temporary hold on checks due to Federal Reserve regulations. Many financial institutions take advantage of “safeguard exceptions” to protect themselves and their customers by holding checks for several business days.
A deposit hold ensures that the check payer has the money available. A deposit hold on checks also prevents people from spending before funds clear. Suppose you deposited a check into your account, spent the money, and then the check is returned unpaid. A bank may issue a fine, and you would have to reimburse the money you spent. If there is insufficient money in your bank account to cover the amount you spent, you may face an overdraft fee.
These are a few common reasons why a bank decides to withhold funds for an extended period:
New Customers
Financial institutions consider accounts new if they have only been active for less than 30 days. Customers who have managed their accounts for extended periods without significant issues may expect fewer holds.
Large Deposits
A deposit hold can be put on sizeable checks until it clears. If your check deposit is more than $5,000, you can expect to wait two business days to receive up to $5,000. However, it may take up to five business days to receive the remaining amount of the large deposit. If the deposit amount is more than your available balance, you will also have to wait a few days to spend your earnings.
Frequent Overdrafts
An overdraft occurs when a person spends more money than they have available in their account balances. If a person frequently overdrafts their bank account, the bank is more likely to place a hold on a deposited check. This ensures the money clears and that you don’t spend more cash than you have available.
Checks Previously Returned Unpaid
If you attempted to deposit a check, but it was returned unpaid, you may try to deposit a new check provided by the same person again. If a check was returned unpaid at least once, the bank would place a hold on the money to ensure the payment clears.
Emergency Deposits
Individuals who undergo emergencies, such as natural disasters or power outages, may receive financial assistance. Suppose you received a check under emergency conditions from the government. In that case, you could spend your money by the next business day if you make a deposit in person. Emergency deposits made at an ATM can take two business days to clear.
Another thing to keep in mind is that if there is a levy on your bank account, then there also may be a hold on deposits. There are ways to stop a levy on a bank account.
What Is the Process for Releasing a Check Hold?
If you currently have a hold on your check from a bank or credit union, you may be wondering why exactly the process can take some time. This is because there are a few steps involved with the process:
| Step | Description |
| 1 | The bank’s verification of the check’s legitimacy. |
| 2 | Confirmation that the check issuer’s bank account has sufficient funds. |
| 3 | Adherence to the bank’s funds availability policy and federal regulations. |
| 4 | After the verification process, the bank will release the hold, making the funds available for withdrawal from the bank account. |
How Can I Avoid a Check Hold in the Future?
There are several steps you can take to avoid a check hold that a bank may place in the future; here are some tips:
- Establish a good account history with minimal overdrafts.
- Deposit checks during business hours and well before the cutoff time.
- Use direct deposits or electronic transfers to your bank account when possible.
- If receiving checks from someone, request certified checks or cashier’s checks.
- Maintain regular communication with your bank, especially if you anticipate large deposits.
- Deposit with the same bank that you handle all your personal finance with.
Are Holds Placed on Cashier’s Checks or Money Orders?
If you need money quickly, you may wonder if it’s better to request a cashier’s check or a money order instead of a personal check.
A cashier’s check is similar to a paper check, but the money comes from the bank’s funds. A bank guarantees the money, but you may still have to wait two business days. On the other hand, with money order options, the party making the payment pays ahead of time. This guarantees payment, so you may only have to wait one business day.
How Can I Check if My Deposit Cleared?
When you make a deposit at a bank or ATM, make sure you receive a deposit receipt. A deposit receipt should have information on when the check funds will be available to spend. Contact your bank if you check your account balance on the receipt date and discover the money has not been credited to your account. The bank may have placed an extended hold on your deposited check.
FAQs About Check Holds
Not necessarily. Different checks might be subjected to different hold durations based on their amounts, sources, and any previous history with the issuing accounts.
Weekends and bank holidays can extend the duration of a check hold since these days are not considered business days.
Holds in joint accounts function similarly to individual accounts. However, any holder in a joint account can deposit or inquire about holds, and actions of one account holder (like frequent overdrafts) might impact the hold policies for the entire account.
What are the legal implications of a check hold?
Banks are required to adhere to the regulations set by the Federal Reserve (in the U.S.) regarding how long they can hold deposited funds.
Customers must be notified if a hold will be placed on their deposit.
Banks may be liable if they improperly hold funds longer than the regulated period without a valid reason.
Directly, a check hold does not affect your credit score. However, if a check hold leads to insufficient funds in your account, and you miss a payment or incur an overdraft as a result, that could negatively impact your credit score.
– Understand your bank’s funds availability policy.
– Regularly monitor your account.
– Be cautious when depositing checks from unknown sources.
– Use electronic transfers when possible to avoid holds.
CreditNinja’s Thoughts
Understanding check holds can be complex. At CreditNinja, we recognize the importance of quick access to your funds. While regulations shape clearance timings, being informed helps in minimizing delays. Trust us to guide you through every financial challenge with clarity and confidence.
For more personal finance information, and to answer questions like “what is a suspense balance?” check out the rest of the CreditNinja Dojo blogs!
References:
- Why your bank is holding your check, and what you can do about it | Business Insider
- Direct Deposit Stays on Top in New Survey on Getting Paid | Nacha
- How quickly can I get money after I deposit a check into my checking account? | ConsumerFinance.gov
- Funds Availability And Your Bank Account: What You Need To Know | Forbes
