How long can a bank hold deposit?

Don Taylorq_v2.gifDear Dr. Don,
I have a check for an annuity distribution from John Hancock, drawn on a JPMorgan Chase account. I went to a branch of Chase and was told they did not have those kind of funds in their branches -- less than $50,000. I wanted to cash the check to avoid Wells Fargo holding the funds, once deposited, forever and ever. I ended up having to deposit the funds at Wells Fargo.

I can't find anything on the Internet that specifically outlines how long a bank can truly, and legally, hold up your funds. Chase and Bank of America have both told me that federal law prohibits any deposits from being held more than seven business days -- Wells Fargo is holding 90 percent of the funds for 11 business days.

While I am no expert, I'd venture to bet that Wells Fargo will have the funds from Chase within three to five business days. Is there any Web site that specifically outlines hold periods for banks?
-- Kevin Check

a_v2.gifDear Kevin,
It's frustrating, I know. Banks do handsprings to speed up the check-clearing and funds-transfer process on their side, but treat customer holds as if the bank had to wait for the stagecoach to get in. I once had a bank tell me it was going to put a three-day hold on a cashier's check drawn on that very same bank.

The banks know the rules and follow them. You can know the rules, too. While I can understand why it's not bookmarked on your favorites page, the regulations listing of the Federal Reserve offers helpful information. The document "Compliance with Regulation CC" explains bank hold policies for different types of deposits.

To finesse the issue, finesse the method of payment. Talk to John Hancock about your payment options. You may be able to get the payments sent as an electronic funds transfer, direct deposit or wire to your Wells Fargo account. While wire transfers can be expensive, a direct deposit is not.

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "Financing a home," "Saving & investing" or "Money." Read more Dr. Don columns for additional personal finance advice.

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