What Is Reg CC and Its Rules on Funds Availability?

Regulation CC, which implements the Expedited Funds Availability Act (EFAA), establishes federal rules for how quickly banks must make deposited funds available to their customers. This regulation ensures individuals and businesses have timely access to their money while allowing financial institutions to manage the risks associated with check processing. Reg CC applies to transaction accounts, which are those that permit transfers or withdrawals for payments to third parties.

Basic Funds Availability Timelines

A “business day” under Regulation CC refers to any calendar day other than a Saturday, Sunday, or federal holiday. A “banking day” is defined as any business day when a bank is open for substantially all of its banking activities, up to its cut-off hour. Deposits made on a non-banking day are considered to be made on the next banking day.

Funds from certain types of deposits are available on the next business day after the banking day of deposit. This includes cash deposited in person to a bank employee, and electronic payments like those received via Automated Clearing House (ACH) or wire transfers. For checks, funds from U.S. Treasury checks, U.S. Postal Service money orders, federal, state, and local government checks, as well as cashier’s, certified, and teller’s checks, receive next-day availability if deposited in person and payable to the account holder.

Checks drawn on the same bank where they are deposited, known as “on-us” checks, are also available on the next business day when deposited in person or at an on-premises ATM or night depository. For other checks, such as those drawn on a different bank, funds must be made available by the second business day following the day of deposit. The first $275 of funds from such check deposits must be made available on the next business day. Deposits made at an ATM not owned by the bank, however, may have funds available by the fifth business day.

Extended Holds and Exceptions

Banks are permitted to place longer holds on deposited funds under specific circumstances, even if the funds would be available sooner. These exceptions are designed to protect financial institutions from potential losses. One common reason for an extended hold is a large deposit, which applies when the aggregate amount of checks deposited on a single banking day exceeds $6,725. For such deposits, the amount exceeding $6,725 may be subject to a longer hold, with the initial $6,725 made available according to standard schedules.

Another exception applies to redeposited checks, which are checks that have been returned unpaid and then deposited again. New accounts, defined as those open for 30 days or less, are also subject to extended holds, though funds from electronic direct deposits and the first $6,725 of certain government or certified checks must still be made available sooner.

Accounts that have a history of repeated overdrafts may also trigger an extended hold. This applies if the account has been overdrawn frequently. Banks can impose a hold if they have reasonable cause to doubt the collectibility of a check. This doubt must be based on objective facts, such as receiving a notice that a check will not be paid, or if the check is post-dated or appears altered.

Emergency conditions, such as natural disasters or system failures, can also justify extended holds. When an extended hold is applied, the funds must be made available within a reasonable period, which means an additional one business day for “on-us” checks or an additional five business days for other checks, bringing the total availability to seven business days. For non-proprietary ATM deposits, the extension can be up to six business days.

Bank Notification Requirements

When a bank decides to place an extended hold on deposited funds, it is required to notify the customer. This notification must be provided in writing and clearly explain the details of the hold. The notice must specify the exact amount of the deposit that is being held and the specific reason for the hold, referencing one of the allowable exceptions under Regulation CC.

The notice must also state the precise date when the funds will become available for withdrawal. Even with a hold, the initial $275 of the check deposit will be made available on the next business day.

The timing of this notification is also regulated. If the bank determines at the time of deposit that a hold will be placed, the written notice should be provided then. If the deposit is not made in person to a bank employee, such as through an ATM or night depository, or if the decision to hold funds is made after the deposit, the bank must mail or deliver the notice no later than the first business day after the banking day of the deposit.

Consumer Rights and Resolving Issues

Consumers have specific rights under Regulation CC regarding the availability of their deposited funds. Banks are required to provide customers with a clear disclosure outlining their funds availability policy when an account is opened.

If a customer believes their funds have been improperly held, the first step is to contact the bank directly. This can involve speaking with a branch manager or customer service representative to explain the situation and present any relevant documentation, such as deposit slips. Clearly stating the basis for the dispute, referencing the bank’s own policy or Regulation CC rules, can facilitate resolution.

Should the issue remain unresolved after direct communication with the bank, consumers can escalate their concern to relevant regulatory agencies. These agencies include the Consumer Financial Protection Bureau (CFPB), the Office of the Comptroller of the Currency (OCC), or the Federal Reserve. These bodies oversee compliance with banking regulations and can investigate complaints regarding funds availability.