What Does a Check Hold Mean on a Bank Account?

A check hold refers to the period a bank temporarily restricts access to funds from a deposited check. This practice allows financial institutions to manage the inherent risks associated with check processing. By placing a hold, banks ensure the deposited check successfully clears through the banking system before the funds become fully available for use. This helps protect both the bank and the account holder from potential losses due to insufficient funds or fraudulent checks.

Understanding a Check Hold

When a check is deposited into a bank account, the funds are not always immediately accessible. This waiting period is a standard risk management procedure, allowing the bank to verify that the check is legitimate and that the funds are actually available from the payer’s bank.

The process involves the deposited check being sent to the payer’s bank for payment. This interbank communication and verification process is known as check clearing. Until the check officially clears, the receiving bank holds the funds to prevent issues if the check were to bounce or be returned unpaid.

Typical Durations of Check Holds

The length of a check hold can vary, but federal regulations establish guidelines for how long banks may delay the availability of funds. For many checks, funds are made available by the next business day or within two business days. A business day excludes weekends and federal holidays.

Certain circumstances can lead to extended hold periods, which might last up to seven business days. Banks are required to make funds available within a “reasonable period” as defined by federal guidelines. These longer holds are applied when there are specific risk factors associated with the deposit.

Common Reasons for Check Holds

Several factors commonly trigger a check hold, allowing banks to mitigate potential risks. One reason is the deposit of a large check, exceeding $5,525, where the amount over this threshold may be held for an extended period. Banks exercise more caution with substantial sums to verify the availability of funds.

Deposits made into new accounts, generally those open for less than 30 days, are subject to holds because the bank has less history with the account holder. Accounts repeatedly overdrawn in the past six months may experience longer holds on new deposits. This protects the bank from further losses if the account continues to face financial difficulties.

Banks may place holds if they have reasonable doubt about the check’s collectibility, such as with post-dated checks, checks older than six months, or those suspected of being fraudulent. Redeposited checks can incur longer holds. Deposits made at non-bank ATMs may have extended hold times compared to those made in person or at the bank’s ATMs.

Accessing Funds During a Hold

While a check hold is in effect, the full deposited amount is not available for immediate use. Federal regulations require banks to make a small portion of the funds accessible quickly. For instance, at least $275 of most check deposits must be made available by the next business day after the deposit.

The remaining funds on hold cannot be withdrawn, transferred, or used for payments. Although the deposit may appear in your account balance, these held funds are not yet part of your available balance. Attempting to use held funds can lead to declined transactions or overdraft fees.

Addressing a Check Hold

When a check deposit is placed on hold, banks are required to inform the customer about the delay. This notification occurs at the time of deposit, appearing on a deposit slip, ATM screen, or a mobile banking confirmation. If the hold is applied after the initial deposit, the bank sends a notice via mail or email.

To understand the specifics of a hold, contact your bank’s customer service or inquire at a branch. They can provide the exact release date for the funds and explain the reason for the hold. Reviewing your bank’s check hold policy, available online or upon request, can provide insight into their standard practices for various deposit scenarios.