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| Regulation CC sets check 'hold'
rules |
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Delaying funds availability
For certain types of deposits, Regulation CC permits financial institutions
to delay, for "a reasonable period of time," the availability of
the funds. The Fed generally defines "reasonable" as one additional
business day for on-us checks, five additional business days (total
of seven) for local checks and six additional business days (total
of 11) for nonlocal checks. Institutions may impose longer holds
in exceptional cases.
Deposits of cash and electronic payments are not eligible
for exception holds.
Here are the six types of deposits that are eligible:
Large deposits (greater
than $5,000) -- Any amount greater than $5,000 may be held. Banks
must make the first $5,000 of the deposit available for withdrawal
according to the bank's availability policy and the remainder
within the "reasonable" time frames.
Redeposited checks
-- May be held unless the check was returned because an endorsement
was missing or because the check was postdated. If the deficiency
is corrected, the check may not be held as a redeposited check.
Deposits to accounts that are repeatedly
overdrawn -- An account may be considered repeatedly overdrawn
and items may be held if:
1. On six or more banking days during the previous
six months the account had a negative balance, or would have
had a negative balance had checks and charges been paid, or
2. On two or more banking days during the previous
six months the account balance was negative in the amount
of $5,000 or more, or would have been had checks and charges
been paid.
Reasonable cause to doubt
the collectibility of a check -- Doubtful collectibility
may exist for postdated checks, checks dated more than six months
earlier and checks that the paying institution has said it will
not honor.
Checks deposited during emergency
conditions that are beyond the control of your bank -- Such
checks may be held until conditions permit the bank to provide availability
of the funds. Examples of emergency conditions are natural disasters,
communications malfunctions and other situations that prevent the
institution from processing checks as it normally does.
Deposits into accounts of new
customers (open for less than 30 days) -- Next-day
availability applies only to cash, electronic payments and the first
$5,000 of any other next-day items; the remaining amount from next-day
items must be available by the ninth business day.
A check is considered "local" if your institution
is located in the same check-processing region as the paying institution.
Funds from local checks must be made available by the second business
day following the day of deposit.
A check is considered "nonlocal" if your institution
is not located in the same check-processing region as the paying
institution. Funds from nonlocal checks must be made available by
the fifth business day following the deposit.
A check-processing region is generally the geographical
area served by the 12
Federal Reserve banks.
Source: The Federal Reserve
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