I have a question about checks. How long does it normally take for one to clear? Is it legal to put an eleven business day hold on a check being deposited? If the check clears during that time, are the funds still held until the end of the hold time?
The time that a check takes to clear (get paid by the bank that it's drawn on) varies widely, depending primarily on the distance between the bank where the check is deposited and the bank it's drawn on, and the number of hands it has to pass through on the journey. Checks can clear in as little as one day, or as many as five or more days. Occasionally, the check's trip is interrupted by transportation delays or mishandling. The bank accepting a check for deposit is concerned with the length of the check's trip to the paying bank, plus the trip back, if the check is not paid.
When a check is drawn on a distant bank (outside of the depositary bank's check processing region), the depositary bank frequently places a five business day hold on all but the first $100 of the check. In some cases, the depositary bank may place what is called an "exception hold" on the check, and may delay making some or all of the check amount available until the eleventh business day (that's about two calendar weeks).
If the check is paid (cleared) before the end of the eleven-day hold, the depositary bank will normally not know about it. Banks do not notify other banks when checks are paid. Instead, they operate on an "exception basis." That means they only notify anyone when something goes wrong. That's why, for example, even if you reach the eleventh day and withdraw the funds from the check, if the check ultimately bounces, you'll still be responsible for it.
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The time that a check takes to clear (get paid by the bank that it's drawn on) varies widely, depending primarily on the distance between the bank where the check is deposited and the bank it's drawn on, and the number of hands it has to pass through on the journey. Checks can clear in as little as one day, or as many as five or more days. Occasionally, the check's trip is interrupted by transportation delays or mishandling. The bank accepting a check for deposit is concerned with the length of the check's trip to the paying bank, plus the trip back, if the check is not paid.