Whenever you deposit a check in your savings account or checking account in person, through an ATM or using mobile deposit tools, it has to go through a processing cycle to get verified and eventually clear. Unlike a cash deposit or a direct deposit, until your bank processes the check according to its policies, you may see a hold on the check deposit and possibly get access to only small amounts for the first day or so.
However, several other situations can cause a check hold, so it's helpful to understand how check clearing and holds for check deposits work so you can take action when needed.
Demystifying the Check-Clearing Process
The Federal Reserve mentions that most checks get processed electronically these days to speed up clearing times, but some paper checks still get processed manually. Your bank retains the original paper check, if it's presented, for a certain period of time and makes a substitute check in the case of electronic check deposits.
Your bank sends the deposited check image electronically or manually sends the paper check to a clearing channel for processing. This may be a local clearinghouse, another financial institution (such as the check writer's bank) or one of the Federal Reserve banks. The check is validated, and if everything goes well, the money comes out of the check writer's account and goes into your bank account as part of the available balance, where you'll have full access to the funds.
If there's a problem with the check, then it doesn't validate and will bounce. This often leads to returned check and overdraft fees for the check writer and headaches for you as the recipient. For example, you may make transactions expecting that received check to clear and end up with a negative balance when the bank ultimately rejects it. Trying to get the funds for a bad check can mean going through extensive steps to contact the check writer or even taking legal action depending on their response and the amount.
Defining Holds on Check Deposits
Whether your check goes through electronic or manual processing, the required steps take some time. Usually, you can expect checks to clear within one to two business days whether you deposit them in person, by ATM or using your bank's website or mobile app. However, the process could take as many as six business days when different banks get involved and between seven and nine business days for large deposits, post-dated checks or new accounts.
During that processing time, your bank may hold part or all of the check's amount so that you have to wait to use that money. Depending on the bank and check deposit method, you may get a notice through your banking app or website, ATM slip or deposit receipt saying when the funds will be available and how much may be available right away and on subsequent days.
Exploring Funds Availability Policies
The holding time, cutoff time for deposits and available funds can vary by bank. But most often, you'll get access to as much as $200 of the deposited check's amount within one business day – sometimes even immediately – and the rest upon completed processing. Some major banks that follow this policy include U.S. Bank, Bank of America, Capital One and Chase.
SunTrust Bank follows this one business day policy but lets you have as much as $400 more on business day two and the rest on business day three, as long as no issues arise. On the other hand, PNC Bank gives you $100 on the evening you make the deposit and another $100 the next business day with the rest coming once the check clears.
Knowing Reasons for Check Deposit Holds
If you get notified that your bank has placed a hold on your check deposit, this often doesn't mean you did anything wrong or that the check has an issue. Your bank is simply following its policies for funds availability and being proactive to ensure it eventually gets the money from the check writer's financial institution.
On the other hand, an extended hold could indicate a problem with your account, the banking systems or the check itself. In such cases, the hold could remain on the deposited check for one week or longer, and the bank may require some action to resolve the issue.
Some issues that could cause extended check holds include the following:
- You or the check writer may have a history of frequently returned checks or overdrafts.
- The check already bounced once, and you're trying to deposit it again.
- The check may be incomplete or have a problem such as a missing endorsement, incorrect account number or wrong routing number.
- Your check may come from a foreign bank and thus take longer to process.
- Your check may be for a large amount (such as over $5,000) and therefore raised a red flag with the system.
- The banking network could have some temporary network failure or computer issue.
- You haven't had your account for long, and the bank sees the check deposit as suspicious and thus delays the funds availability.
- The bank was notified the check could be fraudulent or otherwise not collectible due to factors like being postdated or very old.
Speeding Up Check Deposit Times
Only your bank has the power to lift the hold on your check deposit and give you full access to the funds. In many cases, the hold will eventually lift automatically according to the bank's funds availability policy, and you won't need to take any action unless there is a real problem with the check or your account. In those cases, your bank should notify you of the actions you need to take, and this may involve contacting the check writer about the issue.
On the other hand, you can take some steps to help resolve the issue and potentially avoid long check deposit holds in the future.
These actions include the following:
- Contacting the bank: If the hold has been in place longer than usual, try giving the bank a call to find out if any action is needed from you or the check writer. However, you'll probably want to wait at least a few business days in case the hold is just a slowdown in the regular check-clearing process. For example, you may have made the deposit on a holiday or weekend and simply need to account for those non-business days.
- Using your account responsibly: If you're a new customer at the bank, having deposits clear faster may simply require using your account properly for a month or so to establish a good relationship with the bank. Regardless of how long you've been a customer, avoid overdrawing your account or having checks bounce to prevent fees along with funds availability issues. If these problems do happen, get your account to a positive balance as soon as possible.
- Looking into bank policies: Since funds availability policies vary by bank and the check deposit method, check your account's documents to find out the standard times, or you can call to ask about policies. If you find that the check hold times are too long for your liking, you can consider other banks that may offer faster funds availability.
- Considering cashing the check instead: While cashing your check at the bank can still lead to holds on some of the funds depending on the check amount, you could seek a third-party check-cashing service if you need the money fast. Keep in mind that you'll likely pay fees for this, and that these businesses set their own maximum check amounts.
- Requesting funds another way: Rather than asking for a paper check, find out if the person or organization can send you a money order, deposit the money directly to your bank account or pay you through an electronic platform like PayPal. This may provide quicker access to the funds.
- Federal Reserve Bank of New York: Check Processing
- Shaev & Fleischman, P.C.: How to Make Sure Your Checks Clear Faster
- WalletHub: Funds Availability: When Will Your Deposit Clear?
- Office of the Comptroller of the Currency: Checking Accounts: Understanding Your Rights
- My Bank Tracker: The Time It Takes for a Check to Clear at Top Banks
- Investopedia: Check Hold
- NerdWallet: Bounced Check: The True Costs and What You Can Do
- Bank of America: Deposit Holds FAQs
- National Credit Union Administration. "Understanding a Check and Balancing a Checkbook." Accessed Apr. 27, 2020.
- Consumer Financial Protection Bureau. "I Received a Check Where the Words and the Numbers for the Amount Are Different. Is This Check Valid and for How Much?" Accessed Apr. 28, 2020.
- Consumer Financial Protection Bureau. "Can a Bank or Credit Union Cash a Post-Dated Check Before the Date on the Check?" Accessed Apr. 29, 2020.
- Consumer Financial Protection Bureau. "Can I Cash a Check at Any Bank or Credit Union?" Accessed Apr. 29, 2020.
Ashley Donohoe has written about business and technology topics since 2010. Having a Master of Business Administration degree, bookkeeping certification and experience running a small business and doing tax returns, she is knowledgeable about the tax issues individuals and businesses face. Other places featuring her business writing include Zacks, JobHero, LoveToKnow, Bizfluent, Chron and Study.com.