Check Hold: Definition, How It Works, Types, and Time Limits

What Is a Check Hold?

A check hold is the maximum number of days that a bank can legally hold the money from a check that's been deposited. The bank must credit the funds to the account of the party making the deposit after the check hold period has expired.

The check holding period is generally equal to the number of days it takes for the check to go through the bank's clearing cycle.

How Check Holds Work

The Expedited Funds Availability Act of 1987 (EFAA) mandated that local checks may be held for no longer than two business days. All checks in the United States were considered to be local after 2010. The two-day hold has been extended to five days as a reasonable limit for holding some checks.

The Federal Reserve requires that a bank hold most checks before crediting the customer’s account for no longer than a “reasonable period of time.” This is accepted as two business days for a same-bank check and up to six business days for one that's drawn on another bank. Financial institutions may hold on-us items for one business day following the deposit.

Banks may decide to place six types of holds on checks:

1. Any amount that exceeds a $5,525 deposit can be held. This “remainder” must be made available within a reasonable time, usually two to five business days. Such deposits are considered large deposits.
2. Checks that are redeposited may be held for a reasonable period of time, but the bank may not hold the check as being redeposited after it has corrected the deficiency if a customer returns the check due to a missing endorsement or because the check was postdated.
3. Banks can hold checks from funds that are repeatedly overdrawn. An account is considered to be repeatedly overdrawn if it's had a negative balance on six or more banking days during the most recent six-month period, or if the account balance was negative by $5,000 or more two times in the most recent six-month period.
4. A hold can be placed if a bank has reasonable cause to doubt the collectability of the check. This is referred to as "doubtful collectability." It can occur with postdated checks, checks that are dated six months prior or more, and checks that the paying institution has deemed it won't honor. Banks must provide notice to customers of doubtful collectability, including the specific reason.
5. A bank may hold checks that are deposited during emergency conditions such as natural disasters or communications malfunctions. These could prohibit the bank from functioning with its normal processes. A bank can hold such checks until conditions permit them to provide the available funds.
6. Banks may hold deposits that are made into the accounts of new customers, defined as those who have held open accounts for less than 30 days. Banks can choose an availability schedule for new customers.

The Bottom Line

Banks are permitted by law to hold the money for a period of time when they accept a check for deposit. The exact amount of time is determined by various factors, but it's typically based on how long it will take the deposit to move through the bank's clearing cycle.

It’s imperative that you understand when the money will be available to you if you deposit a check, particularly a large one. Commercial banks are obligated to disclose their hold policies to all account holders. The bank must provide its policy in written form if you ask for it.