How Long Can a Bank Hold a Check?

How Long Can a Bank Hold a Check?

When you deposit a check into your bank account, you expect the funds to be available for use shortly after. However, banks have the right to hold your funds for a certain period of time before releasing them. So, how long can a bank hold a check?

Federal Regulations

According to federal regulations, banks can only hold funds for a certain period of time, which is known as the "maximum permissible holdperiod." The maximum permissible hold period for most checks is two business days for local checks and five business days for non-local checks. However, there are certain circumstances that may allow banks to hold funds for longer periods of time.

Exceptions to the Rule

There are several exceptions to the maximum permissible hold period rule. Banks may hold funds for longer periods of time if the check is for a large amount or if the account has a history of overdrafts. Additionally, banks may hold funds for up to seven business days for checks deposited at ATMs or through mobile banking.

Tips for Avoiding Check Holds

If you're tired of waiting for your funds to become available, there are several things you can do to avoid check holds. First, consider opening a new account at a different bank. Some banks have shorter hold periods than others, so it's worth shopping around. Additionally, try to deposit checks during business hours and in person, rather than through an ATM or mobile banking. Finally, consider asking the check writer to use a different form of payment, such as a wire transfer or electronic payment.

Investment Opportunities

While waiting for a check to clear may be frustrating, it's important to remember that banks have these policies in place to prevent fraud and protect their customers. Additionally, holding funds for a certain period of time can provide an opportunity for investors to earn interest on their deposits. By depositing funds into a high-yield savings account, investors can earn interest while waiting for their funds to become available.

Conclusion

In conclusion, banks can hold funds for a certain period of time before releasing them to customers. While the maximum permissible hold period for most checks is two business days for local checks and five business days for non-local checks, there are certain exceptions to this rule. To avoid check holds, consider opening a new account at a different bank, depositing checks in person during business hours, and asking the check writer to use a different form of payment. And for investors, holding funds in a high-yield savings account can provide an opportunity to earn interest while waiting for funds to clear.