A check hold is the period of time that your bank or credit union hangs on to your check before the funds are released and available in your account. Check holds allow both the sending and receiving financial institutions time to validate a check.
It might seem annoying to have to wait for your money, but the process can help avoid check fraud and bounced checks, which can sometimes result in fees to the account holder. Fortunately, check holds are governed by laws that limit most such holds to two business days (though there are some exceptions, explained below).
Here’s what you need to know.
How Does a Check Hold Work?
When your bank receives a check — be it through the mobile deposit feature on its app or at the physical bank branch — it doesn’t necessarily receive the full credit for the dollar amount on the check. Instead, many checks must first go through the Federal Reserve’s central clearinghouse. This can contribute to a situation in which a check is on hold.
Only after this process is complete does the recipient bank have full access to the funds.
Although some checks may clear immediately, others may not, which means the account holder cannot yet dip into those funds. In some cases, you may have access to a portion of the money you deposited to your checking account, but not the entire check amount, until the hold ends.
In terms of timing, most “local” checks (i.e., those deposited into a United States financial institution, from a United States financial institution) must clear within two business days. There are, however, some exceptions.
Reasons for Check Holds
Banking processes may require holding a check for a variety of reasons, including mitigating the risk of check fraud. Here’s the scoop.
Risk Mitigation
While check fraud is no longer as common as credit card fraud (likely because checks themselves are used less often), it can happen. Forged signatures, “paper hanging” or “kiting a check” (purposefully writing a check without sufficient funds), and plain old counterfeiting are all ways checks can be risky for both banks and their customers. Having a check on hold means there’s more time to review and verify it. This, in turn, mitigates the risk of attempts at bank fraud.
Regulatory Compliance
As mentioned above, some check holds are actually related to the Federal Reserve’s clearing process, as opposed to a policy written by the bank itself. In those cases, the check clearing process may be, quite literally, out of the bank’s hands.
Bank Policies
Individual banks may have their own policies on the books as far as how long to hold different types of checks internally. Of course, such policies are subject to the laws that limit check holds, described below.
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Check Hold Time Frames
Thanks to the Expedited Funds Availability Act of 1987 (also known as the EFAA), most checks written in the United States must be cleared within two business days. However, in some cases, the time frame may be extended to six business days, including instances where the check is “non-local” (i.e. is being deposited from a foreign financial institution).
The same law requires banks to disclose their funds availability policies to account holders, so if you ever have a question about when your check should clear, you should be able to contact your bank and get an answer. This can help you understand why a bank might hold checks for a few days.
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Typical Hold Periods
The longest you should have to wait for a check hold to clear is about a week.
As mentioned, most “local” checks must clear within two business days, and some may clear more quickly than that. For instance, direct deposit checks often clear by the next business day, as do cashier’s checks and checks that were written from a different account at the same financial institution.
On the other end of the spectrum, if your account is newer, the check is in a large amount, or is being issued from a non-local bank, the hold may extend up to six business days.
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Factors Affecting Check Hold Duration
While most check holds clear within a business day or two, there are certain factors that may extend the time it takes for your funds to hit your account. These include:
• Account history. Those with newer accounts may be subject to longer hold times during the first 30 days of account ownership as the bank works to verify both your identity and the validity and availability of incoming funds.
• The check amount. Larger checks (defined as totaling more than $5,525 in a day) may be subject to longer holds on the amount over the $5,525 mark, though federal regulations require banks to make at least part of the funds available to you within the normal hold time.
Generally speaking, the first $225 of most checks must be available the next business day, even if the remainder is still subject to a hold.
• The source of the check. Checks from foreign banks may be subject to holds of up to six business days.
• Your bank’s policies. As noted, your financial institution — whether a traditional vs. an online bank — is typically required by federal law to list their funds availability protocols in a prominent place — and a bank representative should be able to answer any questions you have about when a check might clear.
These factors can play a key role in how long a check is on hold for.
The Takeaway
While check holds may feel like an inconvenience, they’re a safety measure that can benefit both you and your bank. They allow banks to verify deposits. In most cases, the funds will be available in just one or two business days. In some cases, a hold of up to six business days is possible.
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FAQ
What is the maximum hold period for a check?
In compliance with federal regulations, holding a check usually cannot last longer than six business days. However, if the bank has reason to suspect fraud or your checking account is brand new, longer check hold times may be deemed “reasonable.”
Can a bank hold a check indefinitely?
No. Banks are subject to federal regulations that limit most check holds to two business days, though in some cases the hold period may extend to six business days. While longer holds are possible under certain circumstances (such as a new account or suspected fraud), the bank still must clear your funds once verification is complete.
How can I avoid check holds?
Directly deposited funds generally clear on the next business day, so signing up for direct deposit with your employer is a good way to avoid check holds on your regular paycheck. For other checks, if the amount is larger, you might ask for a certified or cashier’s check, each of which tends to clear more quickly.
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