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About Check Clearing Times

When you deposit a check, I think it should be available next business day or you have to specify it to the cashier. The bank argued with me that every time you deposit a check it takes two business days to be clear. Please explain.

There is a federal law, the Expedited Funds Availability Act, that limits how long a bank can delay your access to funds deposited to your account. The law is an attempt to strike a balance between protecting banks from the risks of paying funds from checks that turn out to be no good, and protecting depositors from the effects of unduly long hold periods.

Cash and some types of checks, if deposited to your account in person with a teller, must be available for withdrawal on the business day after the banking day of deposit. Weekend days do not count. The so-called "next day" deposits other than cash, include any electronic deposit that the bank isn't required to release on the same day it's received, plus cashier's check, U.S. Treasury, certified, or teller's checks, U.S. Postal Service money orders, checks on state and local government, and checks drawn on the same bank that is accepting the deposit.

Other checks that are drawn on banks in the local check processing region have to be made available on the second business day after the day of deposit, and checks drawn on banks outside of the local check processing regions generally have to be released on the fifth business day, one calendar week when no holidays intervene. $100 of the total of the checks, local and non-local, has to be released on the first day after the day of deposit.

The bank can exercise some exceptions to those rules, if your account is less than 30 days old, if you deposit more than $5,000 in checks on the same day, if you are repeatedly overdrawn in your account, if you deposit a check that bounced before, or if the bank has a bona fide reason to doubt that a particular check won't be paid. In all of these cases, except new accounts, the bank is required to notify you of these "exception holds." Exception holds can delay local check access until the seventh business day, roughly one and a half weeks from deposit, and non-local checks until the eleventh business day, generally fifteen calendar days, sometimes seventeen. In every case, the bank has the option of releasing funds sooner than the law requires. Some banks have a policy of generally providing next-day availability on all deposited checks, but reserve the right to make to place holds, with notices to the depositing customers, so in reality, the rule is not as simple as you or your banker described it.

Published on 1/16/09