Why wasn't our cashier's check instantly credited?

Today, my wife received her school fincanical aid reinbursement money (what’s left over fron the grants and loans after tuition is paid) for about $8,000. We have been broke (30 days late on the house and car) and wanted a couple of thousand to pay bills ASAP on Saturday (we use money orders rather than checks to pay bills since the mortgage and car are still in my deceased mothers name and we don’t wish to tip off the lenders that she is deceased). To facilitate this occuring she went to the schools bank (Banc One) and obtained a cashiers check (for which she was charged five dollars) made out *to herself from herself * for about $8,000. She then went to her bank (Huntington Bank) and depositied the check in her checking account (which she has had there for about 15 years) . She then tried to withdraw $2,000.00, but was told by the teller that the money would not be available for 24hours because a “stop payment” could still “theoretically” be made on the cashier’s check. She was told that she should have instead gotten a “certified” check from Banc One instead of a cashier’s check. I had always been told that a cashier’s check was like cash so what’s the deal? Since I don’t even have a bank account what would happen if someone gave me a cashier’s check for a great deal of money ( I do however have her ATM card) from a bank that was far away?

Banks changed the way they handle cashier’s checks a few years ago. My step daughter works for BofA and they changed their policy due to the amount of theft and fraud associated with those types of checks. And a lot of folks have been burned by counterfeit checks lately. I played along with some guy when I was trying to sell a watch on eBay. He sent a $12,500 cashier’s check to pay for a $120 watch. Told me to take my money plus a couple hundred for my trouble and to send the rest to him. Yeah right. I had my SD run the check number and sure enough it came back as a forgery. It’s still tacked up on my office wall.

This issue is governed by the Expedited Funds Availability Act. Read the bold parts of the following excerpt:

**2) GOVERNMENT CHECKS; CERTAIN OTHER CHECKS.–Funds deposited in an account at a depository institution by check shall be available for withdrawal not later than the business day after the business day on which such funds are deposited in the case of-- **
(A) a check which–
(i) is drawn on the Treasury of the United States; and
(ii) is endorsed only by the person to whom it was issued;
(B) a check which–
(i) is drawn by a State;
(ii) is deposited in a receiving depository institution which is located in such State and is staffed by individuals employed by such institution;
(iii) is deposited with a special deposit slip which indicates it is a check drawn by a State; and
(iv) is endorsed only by the person to whom it was issued;
© a check which–
(i) is drawn by a unit of general local government;
(ii) is deposited in a receiving depository institution which is located in the same State as such unit of general local government and is staffed by individuals employed by such institution;
(iii) is deposited with a special deposit slip which indicates it is a check drawn by a unit of general local government; and
(iv) is endorsed only by the person to whom it was issued;
(D) the first $100 deposited by check or checks on any one business day;
(E) a check deposited in a branch of a depository institution and drawn on the same or another branch of the same depository institution if both such branches are located in the same State or the same check processing region;
**(F) a cashier’s check, certified check, teller’s check, or depository check which–
(i) is deposited in a receiving depository institution which is staffed by individuals employed by such institution;
(ii) is deposited with a special deposit slip which indicates it is a cashier’s check, certified check, teller’s check, or depository check, as the case may be; and
(iii) is endorsed only by the person to whom it was issued. **
(b) PERMANENT SCHEDULE.—
(1) Availability of funds deposited by local checks.–Subject to paragraph (3) of this subsection, subsections (a)(2), (d), and (e) of this section, and section 604, not more than 1 business day shall intervene between the business day on which funds are deposited in an account at a depository institution by a check drawn on a local originating depository institution and the business day on which the funds involved are available for withdrawal.
(2) Availability of funds deposited by nonlocal checks.–Subject to paragraph (3) of this subsection, subsections (a)(2),(d), and (e) of this section, and section 604, not more than 4 business days shall intervene between the business day on which funds are deposited in an account at a depository institution by a check drawn on a nonlocal originating depository institution and the business day on which such funds are available for withdrawal.
(3) Time period adjustments for cash withdrawal of certain checks.—
(A) IN GENERAL.–Except as provided in subparagraph (B), funds deposited in an account in a depository institution by check (other than a check described in subsection (a)(2)) shall be available for cash withdrawal not later than the business day after the business day on which such funds otherwise are available under paragraph (1) or (2).
(B) 5 p.m. CASH AVAILABILITY.–Not more than $400 (or the maximum amount allowable in the case of a withdrawal from an automated teller machine but not more than $400) of funds deposited by one or more checks to which this paragraph applies shall be available for cash withdrawal not later than 5 o’clock post meridian of the business day on which such funds are available under paragraph (1) or (2). If funds deposited by checks described in both paragraph (1) and paragraph (2) become available for cash withdrawal
{{4-28-00 p.7427}}under this paragraph on the same business day, the limitation contained in this subparagraph shall apply to the aggregate amount of such funds.
© $100 AVAILABILITY.–Any amount available for withdrawal under this paragraph shall be in addition to the amount available under subsection (a)(2)(D).
(4) APPLICABILITY.–This subsection shall apply with respect to funds deposited by check in an account at a depository institution on or after September 1, 1990, except that the Board may, by regulation, make this subsection or any part of this subsection applicable earlier than September 1, 1990.

The whole Act: http://www.fdic.gov/regulations/laws/rules/6500-3240.html

So what type of check credits instantly? When we were in the mortgage business, I’m fairly certain that we closed many loans and often had the buyer bring a cashiers check made out to themselves (when they needed to bring money to the table).

Well, the bank can “hold” your cashiers check for one day. But I have found that asking to speak with the Branch Manager and explaining that you have been a long time customer (which you have) will usually change their minds. I just deposited a very large treasury Check that way- the teller said “not credited until tomorrow” I asked to speak with MGR, all was OK.

I will point out that was with Wells Fargo. A year earlier- Bank of the West insisted on the “24 hours hold” thing even after I spoke with the MGR. So I said “Ok, I am closing my account. Give me all the money in it”. And then walked over to the bank which had issued the Cashiers check and deposited both my cash and their cashiers check- which they were happy to credit on the spot.

So, yes, they can wait for a day- but you can tell them to kiss your ass and walk. To be fair, if you have a newish acount, a 24 hour “hold” is quite reasonable. But if you have banked for quite some time, then -no.

In our OP’s case- the bank (Huntington) was simply trying to get away with a little free float on your money. Most Banks will try and do that- that’s just what the tellers have been told. BUT if the Management insists, it’s time to walk.

Hahahahaha! You actually had to call someone to know it was a forgery?
:smiley:

Not the same thing at all. First, nothing in the Act prohibits someone from accepting a cashier’s check right away. Second, the entity that accepts a CC at a closing is typically a title company, not a bank. Third, if a buyer at a house closing presents a forged CC, the title company has an immovable, local asset (the house)to proceed against.

As seems so often to be the case around here, Random’s post #3 provides the definitive answer to this banking question. (Random must have that website bookmarked!) That’s the answer, there’s nothing else to it. For some reason, I’d like to add just a little more.

I believe that I have reduced my life expectancy by about two years by trying to explain funds availability to customers when I worked in a bank. Reactions like those attested to by DrDeth are the primary reason why I felt that I had to get out of that job.

Quite simply, if you are not depositing the green U.S. currency in your hand right now, then your deposited funds will not necessarily be available to you immediately. Banks may place holds upon deposited negotiable monetary instruments because they have a legal right to do so. Almost certainly, their decision has nothing to do with you personally. It is an anti fraud protection. I have seen all kinds of fraudulent bank checks, cashiers checks, money orders, etc. If legal protections like these were not in place, our financial system would not exist for long.

If you need cash right away, one solution is to not deposit a check in your account. Instead go to the issuing bank (assuming that bank is not your own) and cash the check. Walk over to your bank and deposit the cash in your account. Should this prove to be unsafe, inconvenient, or impossible for you to do, then demand payment for all your transactions in cash only. Is that unreasonable? Of course. So is the expectation that monetary instruments will be converted to cash instantly.

So let me get this straight there is absolutely no monetary instrument that entitles you to walk into your bank with the instrument, and out with cash? No one has addressed the fact that the teller told Amy that had she had a “certified” check rather than a cashiers check that she could have creditied it on the spot. What is a certified check? Note also that Banc One would have given her cash from IUPUI’s account instantly, but she didn’t wish to go the half a mile to Huntington with that much money (especially on the East side of Indy). Let’s say for the sake of argument that a business man wants to transfer money from point “A” to point “B” and avoid using cash in the transfer (furthermore lets assume that electronic transfer is not an option) what options does he have?

By the way how do people who cannot have a bank account (due to bad checks in most cases) even survive in this day and age? My brother in law Matt was told that he couldn’t open an account because he had written two bad checks last year (even though it was at an account at a different bank). The thing is that his employer (and many in my experience) will only pay with direct deposit. Are there “direct deposit” companies that will take your money into their accounts and then give it to you for a fee (kind of like check cashing places)? Right now he is paying a buddy $30.00 a week to take his $200.00 check into his account and then give him the money. If such companies don’t exist, I would think there would be a significant market for this service given the number of people with garnishments, liens, levies, illegals or those who are just plain anti government (and avoid social security numbers).

But again- although the bank may legally “hold” such items for a brief time… as Random said later there is also nothing that says they can’t credit the amount to you on the spot. The Bank itself will be clearing that check electronically withn hours. If you are a regular cutomer, and have been doing business with that bank for yours, then they should credit your account on the spot. They can, after all “un”- credit your account if it turns out to be a fraud perpetrated upon you & them. Note that WF credited that treasury check to my account on the spot after I spoke to a manager.She checked out how long I had been banking and noticed I had Direct Deposit with my payceck. I didn’t have a large balance on anything.

“Funds availability” wouldn’t be such a scam if the bank credited your account as soon as their account was credited. But they don’t. Besides protection from fraud, they also use the time get get a few extra dinero from the “float”. Remember- even if the bank MAY do so legally, there is nothing* requiring* them do so- other than their own policies.

I recently deposited a very large cashier’s check from a land sale. Since it was over $5000 and not drawn on my bank there was a 9 day waiting period. The funds are in my account, I just can’t access them until Wednesday. This seems perfectly reasonable fraud protection to me.

The teller seemed really scared to tell me there would be a waiting period. I tried to be as nice as possible but he still seemed upset that he had to tell me so. I think this is because of people like DrDeth who get high and mighty with the bank.

Yes, I could have driven across town, cashed the check, driven back to my bank and deposited it, but that’s not a risk I’ll take, thanks.

What kind of a “buddy” charges you $30 for this every week?

This is why there are so many check-cashing businesses. Often you don’t even need ID. They cater to illegals and people that can’t get a bank account. They charge a certain percentage (maybe 3-5%?) of the check as their fee. I’ve never heard of any other way of getting direct deposit except through a bank, though. However, I believe one can open savings accounts without having credit checks, and direct deposits can go into there.

This was probably illegal, even if the check was from out of state. See bolded text:


(b) PERMANENT SCHEDULE.—
(1) Availability of funds deposited by local checks.–Subject to paragraph (3) of this subsection, subsections (a)(2), (d), and (e) of this section, and section 604, not more than 1 business day shall intervene between the business day on which funds are deposited in an account at a depository institution by a check drawn on a local originating depository institution and the business day on which the funds involved are available for withdrawal.
(2) Availability of funds deposited by nonlocal checks.–Subject to paragraph (3) of this subsection, subsections (a)(2),(d), and (e) of this section, and section 604, not more than **4 business days **shall intervene between the business day on which funds are deposited in an account at a depository institution by a check drawn on a nonlocal originating depository institution and the business day on which such funds are available for withdrawal.


I said probably, because there are some exceptions:

a) **NEW ACCOUNTS.–Notwithstanding section 603, in the case of any account established at a depository institution by a new depositor, the following provisions shall apply with respect to any deposit in such account during the 30-day period (or such shorter period as the Board may establish) beginning on the date such account is established-- **
(1) Next business day availability of cash and certain items.–Except as provided in paragraph (3), in the case of–
(A) any cash deposited in such account;
(B) any funds received by such depository institution by wire transfer for deposit in such account;
(C) any funds deposited in such account by cashier’s check, certified check, teller’s check, depository check, or traveler’s check; and
(D) any funds deposited by a government check which is described in subparagraph (A), (B), or (C) of section 603(a)(2),

such cash or funds shall be available for withdrawal on the business day after the business day on which such cash or funds are deposited or, in the case of a wire transfer, on the business day after the business day on which such funds are received for deposit.
(2) AVAILABILITY OF OTHER ITEMS.–In the case of any funds deposited in such account by a check (other than a check described in subparagraph (C) or (D) of paragraph
{{4-28-00 p.7428.01}}(1)), the availability for withdrawal of such funds shall not be subject to the provisions of section 603(b), 603(c), or paragraphs (1) of section 603(e).
**(3) Limitation relating to certain checks in excess of $5,000.–In the case of funds deposited in such account during such period by checks described in subparagraph (C) or (D) of paragraph (1) the aggregate amount of which exceeds $5,000–
(A) paragraph (1) shall apply only with respect to the first $5,000 of such aggregate amount; and
(B) not more than 8 business days shall intervene between the business day on which any such funds are deposited and the business day on which such excess amount shall be available for withdrawal.
(b) LARGE OR REDEPOSITED CHECKS; REPEATED OVERDRAFTS.–The Board may, by regulation, establish reasonable exceptions to any time limitation established under subsection (a)(2), (b), (c), or (e) of section 603 for–
(1) the amount of deposits by one or more checks that exceeds the amount of $5,000 in any one day;
(2) checks that have been returned unpaid and redeposited; and
(3) deposit accounts which have been overdrawn repeatedly.
(c) REASONABLE CAUSE EXCEPTION.–
(1) IN GENERAL.–In accordance with regulations which the Board shall prescribe, subsections (a)(2), (b), (c), and (e) of section 603 shall not apply with respect to any check deposited in an account at a depository institution if the receiving depository institution has reasonable cause to believe that the check is uncollectible from the originating depository institution. For purposes of the preceding sentence, reasonable cause to believe requires the existence of facts which would cause a well-grounded belief in the mind of a reasonable person. Such reasons shall be included in the notice required under subsection (f).
(2) BASIS FOR DETERMINATION.–No determination under this subsection may be based on any class of checks or persons. **

Was your account new? If not, your bank’s only leg to stand on would seem to be subsection (b). But (normally) the regs it references would only allow delays of:

I. 229.13(h) Availability of Deposits Subject to Exceptions

  1. If a depositary bank invokes any exception other than the new account exception, the bank may extend the time within which funds must be made available under the schedule by a reasonable period of time. This provision establishes that an extension of up to one business day for “on us” checks, **five business days for local checks, and six business days for nonlocal checks and checks deposited in a nonproprietary ATM is reasonable. **Under certain circumstances, however, a longer extension of the schedules may be reasonable. In these cases, the burden is placed on the depositary bank to establish that a longer period is reasonable.

And the first $5000 would have to be available even earlier. Sounds like your teller had reason to be nervous when she told you that the bank was going to impose a 9 day hold.

I agree with the point that Rayman (thanks, btw) and others have make about fraud. It’s a real concern. But your bank doesn’t need 9 days to find out if the check is bad.

Summing up and clarifying: For a large check from “across town” deposited to an established account, where that check is not being redeposited, and for which there are no indicia of fraud, the permissible hold is the standard 1 business day, plus an extension of 5 more business days for the amount over $5000.

The only way we get to 9 days is with an intervening 3 day weekend.

Certified Check-A check guaranteed by a bank to be covered by sufficient funds on deposit

I have also found 2 references that refer to a cashier check as a type of cerified check.

The fact is that if it isn’t cash, the then bank has the right to hold it 24 hours if they want. Their real reason doesn’t matter, although I believe in many cases it is simply greed.