How Long Can a Bank Hold a Cashier’s Check?

A cashier’s check, drawn on a bank’s own funds, is often considered a secure form of payment. Despite this, banks routinely place holds on cashier’s checks. This practice allows financial institutions to verify authenticity and manage risks, ensuring funds are genuinely available before release. Understanding these holds, their typical durations, and reasons can help consumers manage their finances.

Understanding Cashier’s Checks and Bank Holds

A cashier’s check represents a commitment of the issuing bank’s own funds, making it a trusted payment method. Unlike a personal check, the funds for a cashier’s check are guaranteed by the financial institution itself. Even with this guarantee, banks implement holds on these checks for several reasons.

Holds provide time for banks to verify the check’s authenticity with the issuing bank. This step is important for preventing fraud, as sophisticated counterfeit cashier’s checks are a common tool used in scams. By placing a hold, banks mitigate their financial risk, ensuring funds are collected from the issuing bank before making them fully accessible to the depositor. These holds are a standard part of banking operations.

Standard Check Hold Regulations

The availability of funds from deposited checks in the United States is governed by federal regulations, specifically Regulation CC, also known as the Expedited Funds Availability Act. Under these rules, cashier’s checks are classified as “next-day availability” items. If deposited in person to a bank employee and certain conditions are met, funds must be available by the opening of the next business day after the banking day of deposit.

A “business day” refers to any day except Saturday, Sunday, or a federal holiday. A “banking day” is the portion of a business day when a bank is open for banking functions. If a deposit is made after the bank’s cut-off time, or on a weekend or holiday, it is considered deposited on the next banking day. Even with next-day availability, banks may still place a temporary hold for verification, but the funds must be released promptly according to the guidelines.

Situations Leading to Longer Holds

While many cashier’s checks qualify for next-day availability, federal regulations permit banks to extend hold times under specific circumstances. These exceptions allow financial institutions to protect themselves and their customers from potential losses. Banks must notify the customer in writing if an extended hold is placed, providing the reason for the hold and the date the funds will become available.

One common exception applies to new accounts, defined as those opened less than 30 days. For these accounts, banks can hold funds for longer periods. Extended holds also apply to large deposits; deposits exceeding $6,725 may have the amount above this threshold held for a longer duration. Accounts with a history of repeated overdrafts may also face extended holds.

Banks can also extend holds if they have a reasonable cause to doubt the collectibility of the check. This includes suspicion of fraud, altered checks, or information suggesting the check may not be honored. Additionally, checks that have been previously deposited and returned unpaid (re-deposited checks) can be subject to longer holds. Lastly, emergency conditions, such as natural disasters or disruptions to banking operations, may also lead to extended hold times.

What to Do About a Check Hold

When a hold is placed on a cashier’s check, proactive communication with your bank is beneficial. Inquire about the specific reason for the hold and the exact date when the funds will become available. While not guaranteed, some banks may consider releasing funds sooner, especially for established customers or if the check can be quickly verified.

Understand your bank’s full funds availability policy, outlined in your account agreement or available upon request. Avoid spending funds from a deposited check until they are fully cleared and confirmed as available, even if a partial amount is accessible. If a check, including a cashier’s check, turns out to be fraudulent after funds are released, you are generally liable for the amount. This reinforces why banks implement holds and why customers should exercise caution.