Late on Dec. 12, a Friday, I deposited a $25K brokerage check in my checking account. Just yesterday, Dec. 17, I receive a letter from the bank saying the funds will be held until “the fifth business day after the day of your deposit,” Dec. 22. So it’ll be ten f*&^%$g calendar days before I have full access to the funds. The check was from an in-state account of a major brokerage. Can the bank do that?
Obviously, the answer is “Yes.” They can do anything they like. If you hate their procedures, then you can do business elsewhere. Not a good attitude for them to take, I agree. But cashing checks is a service, not a right. They can make you do anything they want to receive said “service.”
I thought the Feds (Treasury? FDIC? Comptroller of Currency?) had rules on maximum holds for checks, and that the longest was three calendar days for an in-state check. No?
Banks hold funds from checks as part of risk management, even in countries that don’t allow slippage* . If you haven’t encountered that before, it may be because your particular bank or account product has a higher limit on reserving funds. Individual banks may have exceptions for certain instruments (such as certified checks, bank drafts, etc.) deposited via a teller (as opposed to an ATM), but generally all banks will hold funds on conventional checks over a certain limit.
- Slippage is the practice of not depositing funds into the account of the payee even after the money has been received from the check-writer’s institution. (As far as I’m aware, the US is the only developed country that permits this, but I’m not confident of that assertion.) Holding funds in an account means that you will earn interest on the money even while you can’t withdraw it.
Short answer: yes, they can. It’s a security feature designed to protect not just the bank, but also you should the check be returned and you find your account short $25k you thought you had (and quite possibly already spent a good bit of).
That said, you don’t have to sit around for ten days waiting on your money. Here’s what you do: wait a couple of business days to give the check time to clear the issuing bank. Call your bank’s customer service line, and ask the rep to call the other bank to verify that the check has cleared. Once that’s done, the rep should be able to release the funds into your account.
Depending on your bank, you might have to speak with a supervisor in order to get this done; not all reps will necessarily have the authority or even know how to do this. If you encounter resistance with whomever you’re speaking with, thank them for their time and hang up, then give it a little while and call back. The only situation in which this shouldn’t work is if the issuing bank won’t verify checks for non-depositors, which is rare but does occasionally happen.
In my time at the bank, I heard about as many complaints like this as I did like yours. Check holds are a double-edged sword. Still, the number of times I spoke with someone who profusely thanked us for holding that $10,000 “cashier’s check” that the nice man from Ebay sent them…and offered apologies for previously having bitched us out for same…gave me confidence that the system generally does work. Sorry to hear that it’s bitten you in the ass this time, but you should be able to get around it. (One banking practice you’ll never catch me defending is the lack of transparency regarding options like these for the customer…but that’s another thread.) Good luck.
5 days for a non-local check and 2 days for a local check is what the federal regulation says. However, your idea of local may not agree with your bank’s idea of local - the bank goes by the routing number on the bottom of the check, any routing number that doesn’t route to the same Federal Reserve bank as your bank does is considered non-local.
This is correct as a general rule, but the law also allows for what it terms “suspicious” transactions. These are transactions the bank may believe might not clear. And they are allowed to hold them longer. There’s another set of criteria.
OK, everybody. Looks like they’ve got me, then. If only I hadn’t deposited it late on a Friday afternoon. :smack: But the bank is open for limited hours on Saturdays… it kills me that they don’t count that as a “business day.”
Have you ever tried that? Last year I sold a car and the buyer paid with a personal check. I told him I couldn’t release the title until the check cleared. I called my bank a couple of days after I made the deposit. My bank is Bank of America. I am a premier customer so get a little bit better customer service than the average account-holder. When I called them to ask if the check cleared, they explained that they had no way of knowing. They said that those things are handled on an exception basis, and they can’t track individual checks like that. They can’t tell me when it cleared; they can only tell me if it bounces.
I do not know that much about how the banking business works, but it does seem like the bank has to track every transaction to completion. I don’t know how they could not know if a check cleared, but this is what they tell me. YMMV.
The bank i worked out required us to provide a letter of explaination to the customer immediately (assuming they were in the lobby/car) & even had them sign a copy for the bank’s records. Perhaps the letter-upon-deposit was a courtesy at that bank?
Anyways, i understand how frustrating it is, but if you can, look at it from a different angle. i remember one lady tried to cash one of those “lottery” checks & didnt believe it was fake. She changed her mind after she found out it really was and she was several thousand dollars in the hole when the check bounced.
Oh, and our bank insisted that you could not change or clear the hold date once it was in there - if you could, the did not train their supervisors or managers to do this.
The availability of funds should follow regulation CC.
CookingWithGas, I’ve not only tried it, I’ve done it, twice as a customer and countless times as a banker. It wouldn’t surprise me to learn that certain banks’ reps are are told not to do it, but that’s what manager’s discretion (and no small bit of syrupy sweet politeness) are for.
Between doing this myself and friends and relatives doing it on my advice, I’ve seen it succeed with accounts from B of A, BB&T, Wachovia, Chase, Key Bank, and Bank of Floyd. If you bank with a smaller local bank, of course, YMMV.
Regulation CC covers funds availability on check deposits. No matter what you deposit they have to make $100 available by the next business day. For large deposits:
Whether a check is local or nonlocal depends on whether your bank is in the same check processing region as the paying institution.
Missed the window: the reason you got told that the bank has no way of knowing is because the actual mechanism of this procedure has nothing to do with behind-the-scenes banking juju. “The bank”, as such, doesn’t have a mechanism set up for verifying that checks have cleared and releasing the funds…but individual bankers, or their managers at any rate, do.
Here’s how it goes: I, the banker, pick up the phone and call 1-800-ISSUINGBANK. When I get the service rep, I say, “Hi, this is Roland Orzabal with ReceivingBank. I’m calling to verify that a check cleared. The account number is XXXXXX, check number 241 in the amount of $10,000.00.”
The rep responds, “Yes, that check has cleared the account.” I say “thanks,” hang up, release the funds into the customer’s account and let the customer know that all is hunky-dory. Rocket science, it isn’t. (Of course, my doing this is contigent on you having decently long and positive history with the bank, the check being drawn on a reputable institution, etc.; it’s not a matter of procedure to do it for just any schmo or in cases where I judge the circumstances to be shady. My advice assumes that you meet the required criteria.)
That’s just what I was looking for. My thanks to you and MOIDALIZE.
I used to work for a medium sized credit union. I can’t say what the big banks do, but I imagine it’s a similar process. All of our check deposits got scanned at the end of the day by an optical device that would save the images of the front and back of the checks. Then all the checks would be put in a bag and sent away to the check processor. Once the check is out the door, there’s no real way to “track” it. If a customer inquired, we could conceivably access all the check images from the day of their deposit to find their check and call the institution it was drawn on, but that would mean sorting through hundreds or even thousands of checks because the only way the checks were organized was by day of deposit. Certain money orders had 1-800 numbers you could call to verify that it was a good check, but we generally wouldn’t deviate from the Reg CC hold amounts unless you were a long time account holder and/or you had a lot of funds on deposit.
ETA: What Roland says is true, and I know the tellers at the branch I worked at would do that for our members, but many institutions seemed to have a policy of not giving that information.
This might be part of the problem. I have to admit that once I have deposited a check-even a big one-I don’t remember the issuing bank name, nor the account number nor check number. The amount tends to stick in my head. 
Calling up my bank and asking why that big deposit I made a couple of days ago hasn’t cleared yet might be hard on them. Unless of course the manager has easy access to the above information. Perhaps all the necessary information is available to the manager even for a check that hasn’t cleared yet. If so, my point is moot.
If you read the applicable regs carefully, not only can they hold your deposit for the 5 business days, but in “extraordinary circumstances” they can hold it much, much longer.
The banks have more weasel room here than they normally use.