When you deposit money into your bank account, whether at a branch, ATM, or via electronic deposit, you want to know when the money will be available to be used. You need to withdraw funds from your bank account to pay bills, make purchases, and cover expenses.
The money you add to your checking or savings account isn’t always available right away. Federal regulations allow banks to put a hold on deposited funds for a period of time. You can’t tap into that money until the hold is lifted.
Banks can’t keep your money on hold indefinitely. Federal laws outline rules for funds availability and how long a bank can hold deposited funds. Banks can also use their own discretion in setting guidelines for funds availability.
The Expedited Funds Availability Act (EFAA) imposes a duty on banks to make funds, which you deposited, available for withdrawal within prescribed timeframes established by federal regulators.
What Is Funds Availability?
Funds availability refers to when you can access the money you deposit in your bank account. Federal regulations provide a framework for banks to set their funds availability policies. The federal regulations cover:
- The timing for making deposits available to customers
- Guidelines for disclosing funds availability policies to customers
Under federal regulations, the timing for when deposited funds become available is usually based on the type of deposit, when you deposited during the business day, and the amount deposited.
Banks use these guidelines to create and implement funds availability policies. These policies are typically disclosed when you open your account for the first time. Many banks make their funds’ availability policies available online.
Why Do Banks Hold Funds?
Banks hold deposited funds for a variety of reasons. Banks hold funds to prevent any returned payments from your account in most cases.
Depending on the type of deposit involved, it may take several days for the money you deposit to be transferred to your bank. Placing a hold on deposited funds in the meantime allows the payment to clear your account.
Without a hold, you could write checks, pay bills, or make purchases with your debit card against your balance. If the check you deposited ends up getting returned because the payer had insufficient funds, your bank would have to cover those payments. As a side effect, you would be charged return check fees or overdraft fees for any transactions the bank has to cover.
Funds availability holds protect you and your bank against the consequences of returned payments. Having your bank hold a check works in your favor if it allows you to avoid overdrafts and associated fees.
What Does “Available for Withdrawal” Mean?
“Available for withdrawal” means that funds deposited by a customer are available for all uses generally permitted to the customer, including writing checks, electronic payments, cash withdrawals, and fund transfers between accounts.
When Does a Bank Have to Make My Deposit Available for Withdrawal?
Usually, if you make your deposit in-person to a bank employee before the bank’s business cut-off time, your recently deposited funds will be available to you no later than the next business day. However, there are exceptions to the next business day rule. Funds may be held longer if:
- Your account was opened in the previous 30 days
- Your deposits are more than $5,000 for a single day
- The bank has to deposit a check that was returned earlier
- There were emergency conditions, such as a natural disaster or communications failure
When Does a Bank Have to Acknowledge My Deposit?
The time frames vary for banks to recognize your deposit. Normally, your deposit will be recognized on the next business day and not on the same day you made the deposit when it is made:
- On a non-business day
- At the end of a business day
- After an established cut-off time, such as 2 p.m.
If your deposit is recognized on the next business day, it is possible the funds will not be available until the following day. For example, if you make a deposit at the end of business on Monday, the bank may acknowledge your deposit on Tuesday and make the funds available on Wednesday.
What If I Make a Deposit with a Teller on a Saturday?
Although the bank branch you used may be open to customers, Saturdays are not considered “business days.” A “business day” is any day other than a Saturday, Sunday, or legal holiday when banks are normally closed, such as Christmas or New Year’s Day.
What If I Deposit My Money at an ATM or a Lock Box?
Funds deposited at an ATM or lockbox may have an earlier cut-off time than an open branch. If your deposit is made using an ATM not run by your bank, the timeframes for your bank to acknowledge your deposit and make it available for withdrawal may be longer.
What Is Extended Funds Availability?
Banks have some leeway in determining funds availability hold times for certain deposits. The regulations require your bank to notify you that funds are being held and when they’ll be available to you.
Scenarios where might be subject to a longer hold time on deposits include:
- New account deposits: Next-day deposits are only allowed for cash, electronic payments, and the first $5,000 of a check. The remaining funds are made available on the ninth business day.
- Large deposits: Deposits of more than $5,000 (excluding cash or electronic payments) are available on the second business day for the first $5,000. The remainder is available on the seventh business day or later.
- Redeposited checks: A check deposited once and returned unpaid can be held for seven business days.
- Excessive overdrafts: Deposits made to accounts that have been overdrawn six or more times in six months can be held for seven or more business days.
- Potentially uncollectible checks: Checks that may not be payable because they’re fraudulent, post-dated, or exceed your account balance can be held for seven or more business days.
- Emergency deposits: Deposits made under emergency conditions like natural disasters and power outages can be held until conditions allow the money to be deposited in your account.
These scenarios apply to deposits made at brick-and-mortar, online, and credit unions. Federal regulations bind financial institutions to ensure that hold times are within reasonable limits.
How Do I Check My Bank’s Funds Availability Policy?
Start with the type of deposit you make the most often. If you rely on mobile check deposits to deposit checks, find out how long you can expect funds to be held.
You may want to discuss the best option with your bank if you’re expecting a large payment. If you’re selling your house and expect a large payment at closing, ask your bank whether a wire transfer might be a better choice.
Be careful when accepting checks from unknown or untrusted sources. If you’re selling a truck and someone wants to pay you with a personal check, it may be safer to ask for a cashier’s check.
Do I Need a Lawyer?
The laws which govern the availability of your funds are complex. A qualified financial attorney experienced in banking laws and regulations can determine when funds should be made available to you. If you believe your bank did not make your funds available as prescribed by banking regulations, an attorney experienced in banking laws can help you determine your rights and remedies.
