If you have you ever deposited money into your checking account and found out that you can’t use it right away, it often means that banks are putting a hold on your deposits, preventing you from accessing your funds right away.
This results in you possibly bouncing checks or having issues with automatic payments. Continue reading to learn more about checking account holds, how to prevent, and how to remove them.
What is a Checking Account Hold?
A hold is a temporary delay placed by the bank in making funds available. The bank will “freeze” your funds which essentially means that you cannot withdraw the money or use it for electronic payments, but those funds will still appear in your account.
How Long do Holds Last?
For all new accounts, which is defined as an account that is less than 30 days old, then the financial institution can hold any check for a maximum of 11 business days. The funds will then be made available no later than the 12th business day.
If the account is not a new account, or any account over 30 days old, then the hold times will be determined one of three factors; whether the check is local, nonlocal, or if it’s facing an exception hold. But, these terms are a little misleading to consumers because you may bring in a check from across the street and it not be a local check.
- Local check: The issuing bank routes their checks through the same Federal Reserve as the bank that you are depositing with. Like I said, the two banks may sit across the street from one another, but that doesn’t mean they are local to one another. The hold times for these checks are usually two business days.
- Nonlocal checks: Refers to those that are routed through a different Federal Reserve than the bank you use. The hold time for these are usually five business days.
- Exception Hold: Means that the account is over 30 days old, but the bank has reason to believe the check won’t clear and so they are given the right to place these items on hold for up to 11 business days.
On the other hand, sometimes banks won’t even place holds on any deposits you make, sometimes they are available right away. However, it is still common to see a hold on your account for a couple of business days. Additionally, the type of deposit is important in determining how long your hold lasts.
Why do Banks Put Your Account on Hold?
Money doesn’t always move as fast as people think, including electronic transfers. Initially, when you deposit a money order or a check into your checking account, the bank will credit your total account balance immediately. However, your “available” balance is going to be different and the funds from the other establishment may take a couple days to transfer, and your bank may not know if the payment will clear.
Banks are sometimes concerned that checks written out to you could bounce, or those checks are fake. A hold on a deposit gives banks time to check for those issues. Basically, placing holds on deposits protects banks from losses for both you and the bank. Consider it a processing or verification time to verify your checks and money.
How to Remove a Hold from your Account
Although it is frustrating when you do not have access to your funds, you must respect the banking policy. The computer system that manages all of the transactions follows a series of rules for all checks. It is possible to get a hold removed, but you must plead your case to your bank.
- What Caused the Hold?
- There are multiple reasons as to why your deposit gets held. It can range from making a check deposit, which is subject to standard hold times. On the other hand, your funds might be frozen because you used your debit card at a place that requires preauthorization hold.
- Ask to Have It Cleared?
- If a merchant has placed a hold on your account through your debit card, you must contact the merchant for your funds to be released. It will take a couple of days for those holds to fall off, but be wary of hotels, rental cars, and gas pumps. If your bank places a hold on a personal check, you must call them to have it removed.
- Wait It Out
- In some cases, you won’t be able to do anything about a hold. Again, your bank needs to follow federal regulations and justify any holds in your account, so they can’t keep you from your money forever. If things go on for too long, contact the U.S. Consumer Financial Protection Bureau (CFPB) and file a complaint.
Author’s Verdict
After your hold ends, you will be able to have access to use your money again. Some key points to take away from this post is that you make sure what type of deposits will most likely create a hold on your account. Such deposits include purchases at gas pump, rental cars, and hotels.
If you’re interested in researching new banks, go through our posts about Best Bank Bonuses, Best Savings Account Rates, and Best Credit Card Bonuses. Be sure to soak in all this information when choosing the right bank for you!