I got a large check from my aunt who lives in another state and went to my bank to cash it. They said no because my balance was not high enough. That doen't make any sense. Don't they have to cash a check if I have an account?

No, Fred, they don't. Your bank is trying to protect themselves from the possibility that the check will be returned unpaid. If they cash the check, and it is returned, then they will have to come to you to get their money back. Because the amount of the check exceeds your current balance, there is a possibility that they will sustain a loss.

Hoepfully, the bank suggested that you deposit the check to your account. Presuming the account is a checking account, there is a regulation, Reg CC, that governs when the money would be available to you. My guess is that if you deposit the check, you will have access to the money within 5 business days of when you deposit it.

They do not have to cash the check immediately. What they probably will do is accept it for deposit and then place a hold on the deposit until the check clears. That should actually happen pretty quickly these days, but they are allowed five business (I should have said five to begin with, but I was thinking a week.) days, or possibly longer, depending on the size of the check, how long you've had the account and other factors. These holds are allowed under the the Expedited Funds Availability Act, which may be referred to as Regulation CC. The reason they will do this is that they have no way of knowing if the check is good, and wish to prevent bank fraud. You should talk with the representatives of your bank and find out when the deposit will be available, they should be able to help you with this information. I hope this helps.

They do have the right to refuse to cash the check if your balance is too low in your account. The reasoning behind this is that if they cash the check and it comes back unpaid, they have no way to get the money back that they gave you in cash if you don't have the moeny to cover it in your account. you have a couple of options. you can deposit the check in you account... they may place a hold on it until it clears, you can take it to a branch of your aunt's bank if there is one near you... they should cash it (though they may charge a fee) or if it's a really large sum and you need it right away, you could have her wire it into your account.

Fred,
glad you felt comfortable asking a question that probably happens at banks every day..Hope this forum helps clarify the banks response..My suggestion is to have her wire the money to your account.

Unless you are in immediate need of the funds from the check and cannot wait a few days, I would not suggest having the funds wired into your account as this results in the charging of fees. If you can wait for the check to clear, deposit it into your account.

Is the check issued by a bank that has a local branch to you? If so, it might be possible to take it to that bank and see if they could cash it for you..

One more thought -- a bank is almost never under an obligation to cash a check that is not drawn on that bank, even if the payee has an account there large enough to cover it. Cashing checks drawn on other banks is an accommodation usually offered by banks to their depositors, but with rare exception (some government checks) is there a legal requirement to do so.

Hey John, when you say banks are not obligated to cash checks other than some government checks, what government type checks are you specifically talking about?

I could have made that a little clearer, couldn't I? In some states (notably Massachusetts, and there are some other likely candidates), banks are required to cash selected types of government checks. In Masasachusetts, the law covers all financial institutions (although the implementing regulations only cover state-chartered banks and credit unions), and includes SSA, SSI and any other "pension" or retirement benefit check issued by federal or Massachusetts government or any division thereof.