Dear Dr. Don,

My wife and I have gotten to a point where we have to watch every cent. This has caused us to become ever critical of our bank’s checking account overdraft policies.

We have come up against the policy of running big transactions first. This causes multiple overdraft fees. We also have run up against our bank’s policy of not depositing our ATM deposits based on the timestamp of the ATM, but on whenever they do deposits the next day.

But I’m more concerned with a “seemingly” new policy. My wife is paid by check every week. The check can be anywhere from $80 to $150. Our bank has decided that when depositing a check over $100, it will only credit our account with $100 until the check clears. This seems OK, I guess, except for one other detail: They also place a hold on the funds over $100.

So here is my example: My wife’s account is almost empty, but it is payday. She gives the bank her check for $125, and requests that only $70 be deposited with the rest back in cash. In her account, the bank immediately deposits $70, but invisibly there is a $25 hold on her account.

If my wife was to spend $50 on groceries out of her account, it would bounce. Even though the bank credited her account with $70, it held $25. So, her available balance until the check cleared was only $45.

Another example: I have $5 in my account. I deposit $25 out of a $150 check. If I make even a $1 transaction, it will bounce — in essence, by depositing money I have overdrawn my account with a $50 hold even though I had $5 already in my account.

How is this legal?

— Matthew Miffed

Dear Matthew,

The banks are tightly regulated on funds availability when you deposit a check. The rules are spelled out in Regulation CC, Availability of Funds and Collection of Checks. But you don’t have to read the act — the Federal Reserve Board’s publication “Compliance with Regulation CC” provides a nice summary.

Your examples show you’re trying to finesse the issue by cashing part of the check and depositing part of the check. The bank’s hold policy is based on the total amount of the check, not how much of the check you’ve deposited.

I understand that money’s tight in your household right now. That’s true of a lot of households in the current economic environment. But money gets even tighter when you pay insufficient funds fees on bounced checks and debit transactions.

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