When a person deposits a check into a bank, the deposit may be subject to a check hold. A check hold is a period of time that a bank is allowed to keep funds from the check without dispersing the funds to the depositor. The amount of time that a bank can hold a check varies according to the type of check that is deposited and can range from one business day to 11 or more days. In the United States, this amount of time is regulated by the United States Federal Reserve Board under Regulation CC. Banks are required by law to divulge their check hold policies to their customers.
An important concept to understand when learning about check holding is "business day." The Federal Reserve Board defines a business day as the days Monday through Friday, excluding any federal holidays, during which the bank is making normal transactions. Banks do not have to disperse funds until the next day after a deposit, or on a "next day availability" basis. Deposits that must be dispersed no later than the day after deposit include a Treasury check deposited into the bank's ATM machine, cashiers checks deposited through a teller, state checks deposited through a teller, and, in many cases, checks from the same banking institution. If a person deposits a check through an ATM that does not belong to his bank, the bank can hold the check for five days.
Two other concepts to understand when looking at bank holds are "local" and "non-local." Local versus non-local does not have to do with being in the same city. Rather, local means that the bank in which the check was deposited is in the same check processing region as the financial institution from which the check was drawn. If a check is considered to be local, the check must be funded on the second business day after the check was deposited. For non-local checks, financial institutions must fund the check by the fifth business day after the check was deposited.
A financial institution can put a check hold on deposits under some other circumstances. For example, if a check that is deposited is greater than $5,000 US Dollars (USD), the amount over $5,000 USD may be held for a "reasonable" amount of time. In addition, checks that are deposited into accounts that are consistently overdrawn may be subject to "check hold." Financial institutions can also put a check hold on a deposit if it comes from a post-dated check or a check that was written six months or more prior to being deposited.
