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Home >> Checks/Money Orders >> Money Orders
Bank Refuses Money Order from Credit Union
Recently, Key Bank refused to deposit my money order from a State Credit Union located on a military base in our state. They stated they had to place a ten day hold on the funds. I have an account at the bank in Morton, Washington, and it was for a meager amount. I have cashed them there before, as they are sent by my daughter, but this money order was scrutinized and they caused me a late fee for my rent and some grief. First they stated that I did not have the corresponding funds to cover the money order, and then changed their minds to say placing a hold was according to FCC regulations. I am upset that the teller laughed at me and when I told her this was not personal, but that they were wrong. They continued to cite FCC regulations. Please provide me with an answer, so I can prove my point. This was harrassment of the worse sort. Also, I can't remember being laughed at in recent years, if ever and took great exception to their treatment of me. Please help.
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 Well, either the bank was at least partly wrong or you misheard what the banker said. The rule in question is Regulation CC and it is a regulation of the Federal Reserve Board. The banker probably said "Reg CC" instead of FCC.
The bank is not required to accept any money order for deposit, and it certainly could refuse to accept a money order if the bank had misgivings about its collectibility. However, the bank can also accept a money order for deposit and place a hold for a period established in the regulation.
It is difficult to determine the maximum length of the hold that the regulation would permit without knowing something about the money order. You said it was drawn on a credit union in your state. If that's the same state in which your bank branch is located, the credit union may qualify as a local depository institution even if its money orders get processed hundreds of miles away.
Your bank can, if it gives you proper notice, delay your access to funds from a deposited local money order until the seventh business day following the day of deposit. Weekends don't count, so that could mean nine or ten calendar days. If the credit union money order doesn't qualify as a local money order, you could legitimately be denied access until the eleventh business day, which is a full sixteen calendar days from the day of deposit.
Even if the bank employees correctly cited Regulation CC as their authority for holding up your access to the deposit, that they laughed at you is appalling. There is no excuse for such behavior.
Published on BankingQuestions.com 10/16/08
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