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When does a deposited check clear?

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Dear Dr. Don,
What is an ATM “deposit hold adjustment”? I deposited a $1,500 check from another bank at my bank’s ATM a day ago and it has not made it into my account. The bank says it has a “hold adjustment” debiting for $1,000. What does this mean? Will I ever get the money?

Thank you,
— Winnie Wants-My-Cash

Dear Winnie,
The good news here is that by the time you read this, you and your money will be reunited. Understanding hold policies is important for everyone using banking services. At issue is when we get access to our funds.

To misunderstand how things work raises the risk of writing checks on money that hasn’t cleared holds. That in turn can cost you added fees for bounced checks and bad marks on consumer banking reports.

Hold policies are determined by the Federal Reserve. In general, a hold on a deposit ensures a check you deposited had funds available to clear the payer’s bank account.

When you deposit the money is key

The time of day you deposited the check into the ATM will influence the length of the hold. If your bank has a cutoff time of 2 p.m., and you deposited the money in the ATM at 3 p.m., it’s considered deposited on the next business day.

A local check deposited in a proprietary ATM can have a partial hold for up to seven business days. A partial hold means that some, but not all, of the money is available. In your case, you had $500 available to you, with a hold placed on the remaining $1,000.

Banks must disclose, follow rules

Banks generally know the rules, and that includes the need to disclose their hold policies to customers.

The Federal Reserve’s publication “Compliance with Regulation CC” tells us this: “Regulation CC requires that financial institutions provide customers who have a transaction account with disclosures stating when their funds will be available for withdrawal; many institutions use the model disclosure statements included in Regulation CC.”

This may not apply to you. But one of the reasons consumers shouldn’t live paycheck to paycheck is that they need a cash cushion or an emergency fund. Having such flexibility will help avoid bouncing checks and paying bank fees when a check doesn’t clear right away.

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