If you’ve ever signed up for direct deposit of your paycheck through your employer, or paid a bill with an automatic bill payment, your transaction has been processed by ACH, or Automated Clearing House. When an ACH hold is placed on your bank account, it means that a payment you’ve authorized is about to be deducted.
ACH Moves Money Around
Automated Clearing House is the electronic funds transfer system in the United States that moves money from one bank to another. The most common payments processed through ACH are payroll checks, Social Security payments and private recurring or one-time debt payments. As online banking becomes increasingly popular, ACH payments continue to increase. ACH reports that in 2016, the system processed over 25.6 billion transactions.
When you set up an automatic payment with a company, you provide your checking account information and authorize the company to withdraw funds on a one-time or ongoing basis. If you’ve authorized your gym, for example, to automatically withdraw your membership dues each month, an ACH entry is created by the gym’s bank when that payment is due. The ACH entry is sent to your bank, which places a hold on your account for the amount of the payment. Within a few days, the ACH entry is processed, and the money transfer is complete.
Why an ACH Hold Occurs
An ACH transaction does not happen instantly: It can take several days for the receiving bank to reconcile and settle the transaction. In the meantime, your bank places a hold on the funds in your account so that the money will be available for settlement. When you see an ACH hold on your account, you’re aware that your payment is about to be sent and that those funds are no longer available for you to spend.
Unauthorized ACH Holds
If you notice an ACH hold on your account, but don’t recognize the company that has created the ACH entry, contact your bank or credit union immediately. Holds can prevent fraud by alerting you that money is about to be withdrawn from your account before the transaction takes places, so you can watch for anything you haven’t authorized.
ACH Pending Credits
If you've signed up for direct deposit through your employers, you might notice a pending ACH credit the day before your money will be deposited. An ACH credit is the opposite of an ACH debit – the money is coming to you, rather than being deducted from your account. Pending ACH funds aren’t available for you to spend, but will be as soon as the transaction is settled.