Do Banks Put a Hold on Cashier’s Checks?

A cashier’s check is a payment instrument issued by a bank, drawn on its own funds, rather than on an individual’s account. This feature provides a guarantee of payment, making cashier’s checks a secure option for large transactions like real estate purchases or vehicle sales. However, despite this perceived security, banks commonly place holds on deposited cashier’s checks. This practice can lead to delays in accessing funds, contrary to the expectation that they are immediately available.

Reasons for Holds

Banks implement holds on cashier’s checks primarily to prevent fraud. Counterfeit checks are a significant concern, as fraudsters create convincing but fake cashier’s checks that can take days or weeks to be identified. The receiving bank needs time to verify the authenticity of the check and confirm that the funds are genuinely available from the issuing bank. Even though the check is drawn on the issuing bank’s funds, the depositing bank must ensure the check is not fraudulent before releasing the money.

Regulatory requirements, such as the Expedited Funds Availability Act, allow banks to place holds under specific circumstances. These include deposits to new accounts, checks exceeding certain dollar amounts, or accounts with a history of being repeatedly overdrawn. Banks also place holds if they have a reasonable suspicion that the check may be uncollectible. These measures protect both the financial institution and the account holder from potential losses if a deposited check proves fraudulent.

Typical Hold Durations

The timeframe for funds availability from a cashier’s check can vary. Banks must make the first $275 of any check deposit available by the next business day. However, access to the full amount of a cashier’s check often takes longer. For checks deposited in person with a teller, the funds are available by the next business day.

Larger amounts or specific situations can lead to extended hold periods. Deposits exceeding $6,725 may have the amount over this threshold held for up to nine business days. New accounts, open for fewer than 30 days, may also experience longer holds. Checks deposited at an ATM or through mobile deposit might have funds available on the second business day, or potentially longer depending on the bank’s policy.

Minimizing Hold Times

Several actions can help reduce the hold time on a cashier’s check. Depositing the check directly at a branch of the bank that issued it can expedite the process. Having a long-standing and positive relationship with your bank, characterized by consistent account activity and no overdrafts, may also lead to shorter hold periods. Depositing the check in person with a teller, rather than using an ATM or mobile deposit, can also help ensure faster access to funds.

Ensuring the check is properly endorsed before deposit is a practical step. For situations requiring immediate access to funds, a wire transfer, although it may incur a fee, offers instant availability and might be a more suitable alternative to a cashier’s check. While banks adhere to regulations, individual policies and your banking history can influence how quickly your funds become available.

Verifying Funds and Bank Policies

Verify the authenticity of a cashier’s check, especially if there is any suspicion. Contact the issuing bank directly to confirm the check’s legitimacy. Never use a phone number printed on the check itself, as this could be part of a fraud scheme; instead, find the bank’s official contact information through an independent source, like their public website. Provide the bank with the check number, the exact amount, and the payee’s name for verification.

Understanding your bank’s specific funds availability policy is also important. This policy outlines when deposited funds will be accessible. Distinguish between funds being “available” in your account and the check having fully “cleared.” Even if funds are available for withdrawal, the check may not have fully cleared the banking system, and you could be responsible if it later proves fraudulent.