Why Do Banks Put a Hold on Deposit Checks? 

Florence Desiata

Imagine this; you’ve just made a check deposit. However, the money you were counting on wasn’t there when you checked. In this case, there’s a high chance that the bank put a hold on the funds for some reason. 

This raises the question, “why do banks put a hold on deposit checks” in the first place? Continue reading this article to uncover the answer. 

Defining Check Holds

Banks have something called a “check hold” that allows them to legally hold onto the money from your deposited check for a certain number of days.

Once this “check hold” period is over, the bank must credit the funds to your account. 

Usually, the number of days for the “check hold” is the same as the time it takes for the bank to process the check.

Common Reasons Why Banks Hold Checks

Banks often put checks on hold for various reasons. Ultimately, these holds help protect the customer and the bank from fraud or other issues. 

Some typical causes for deposit holds include:

Checking for Sufficient Funds

The bank may need to verify that the account has enough money to cover the check amount. This can take up to seven business days to complete.

Redeposit of a Previously Returned Check

If a check you tried to deposit previously bounced due to insufficient funds, the bank may hold the deposit to avoid the possibility of another return. This hold may last up to seven business days.

Deposits From New Customers

When you open a new checking account, the bank will watch your deposit habits to understand your everyday activity. This helps the bank protect you from fees and other issues during the first 30 days of your account opening. 

Large-dollar Deposits

Checks over $5,525 may be subject to a temporary hold while the bank checks to make sure the check writer has enough funds in their account to cover the check.

Frequent Overdrafts

If you have had several overdrafts in the past six months, the bank may place a hold on your deposit until the check clears. This hold can last up to seven business days.

How Long Can the Bank Put My Check on Hold?

Banks cannot keep your deposited checks on hold forever. The Federal Reserve has set rules that require banks to hold onto checks for a reasonable amount of time. 

If the check was issued by the same bank you are depositing it in, the hold could be up to two business days. For out-of-network checks, the hold period might extend to seven business days.

However, in certain circumstances, a bank may need to hold onto a check for longer than the standard period. These circumstances can include situations like the ones mentioned in the previous section.

You can’t access the funds immediately if your check is on hold. However, suppose you deposit a check in person at a branch, and the total amount is $200 or less; you should be able to access the full amount the next business day. 

For checks over $200, you should be able to access $200 on the next business day and the remaining amount on the second business day unless a longer holding period applies.

How to Avoid Check Holds

There are certain things you can do to keep your bank from holding your check. One way is to consider using alternative methods to receive funds, such as enrolling in direct deposit or utilizing person-to-person payment apps.

Good financial habits can also help you build a positive relationship with your bank. Some of these habits include:

  • Avoiding overdrafts
  • Depositing only good checks
  • Maintaining an open account
  • Avoiding frequent bank changes
  • Cashing checks instead of depositing them

It’s also important to regularly monitor your account for any suspicious or fraudulent activity. Such activities can prompt a freeze on your account and restrict access to your funds. 

Setting up banking alerts or notifications can help you stay informed and aware of your account activity.

Requesting to Remove a Hold on a Check

It is possible to request that a bank remove a hold on a check, but there is no guarantee that it will be granted. 

The bank might keep the hold for the maximum allowed period if they think the check could be fake or the person who wrote it doesn’t have enough funds. 

There’s a better chance of the bank granting the request to release the check if the customer can explain the circumstances leading to the hold. However, waiting until the holding period expires may be the only option if the bank needs to verify the check.

When you deposit a check, the money doesn’t move between banks instantly. It takes some time to go through the process. 

It’s better to be safe than sorry. Maintain a minimum balance in your bank account and keep some money aside for emergencies.

Frequently Asked Questions

Why does a bank sometimes hold a portion of a deposit?

The reason for this is that deposit hold regulations differ depending on the amount of the deposit. If the deposit is large, the first $200 must be made available within one business day, but the remaining amount may take longer to post.

Why is my bank putting a hold on my check?

There are several reasons why a bank may put a hold on a check. These reasons include checking for sufficient funds, checking for fraudulent activities, and many others. 

How long does a check hold last?

In general, checks issued by the same bank may be subject to a hold of up to two business days, while checks drawn from a different bank cannot be subject to a hold of more than seven business days.

Is it possible to access part of my funds if my check is on hold?

Ideally, yes. The Federal Reserve mandates that your bank make at least $200 of the check funds available to you by the following business day. Subsequently, the rest of the funds should be released by the second business day.

I’ve had a check previously returned. Would that put a hold on this new check I’m depositing? 

Possibly. To prevent the risk of another return, the bank might impose a hold on the deposit, which can remain in effect for a maximum of seven business days.

The Bottom Line

While it is true that check holds can be frustrating, they are a necessary part of banking. They help protect both customers and banks from potential fraud or other issues. 

Generally, banks can hold onto deposited checks for a reasonable time. Most of the time, these holds are done to ensure no suspicious activities on the customer’s account. 

To avoid check holds, customers can practice good financial habits and consider alternative methods of receiving funds. By staying informed and aware of their account’s activity, customers can better navigate the world of check deposits and banking.

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