What is a ‘check hold’ and how can it affect my bank balance?

If you’ve ever deposited a check in your bank account, you probably noticed it can take some time before the funds are available for you to use.

Banks commonly put a hold on newly deposited checks, restricting availability of the money for a time. If you need the money right away, a check hold can be a frustrating experience.

But there’s good news. Federal law limits the maximum amount of time financial institutions can hold funds — usually no more than two business days. And a check hold can protect you in case the deposited check bounces or you’ve been a victim of check fraud.

Let’s look at what a check hold is, how long it can last, and why a bank restricts the available funds in the first place.

• What is a check hold?
• How long will the check hold last?
• Why might a bank put my check on hold?
• How will I know if a check is on hold?
• What should I do about a check on hold?

What is a check hold?

When you deposit a check, the money isn’t always available right away. The amount of time that it takes for your funds to become available is sometimes referred to as a check hold. It means the bank is holding the money and you can’t spend it yet.

Not all banks and credit unions use the same check hold period. The maximum deposit hold period was established by the federal Expedited Funds Availability Act, and your bank or credit union generally can’t hold deposit funds past that period. But there is no minimum hold period. Your bank decides whether it will release the funds to you faster than the maximum hold period.

How long will the check hold last?

The financial institution will decide how long to keep your check on hold based on the size of the check, who the check is coming from and your account history. Your bank’s account agreement should explain when you can expect funds to be released under certain situations.

Generally, funds from deposited checks can be available the next business day if …

• The check is for less than $200.
• It’s a certified check, drawn on another account at your financial institution, or a government check.
• You made the deposit in person at your bank with the help of a bank employee.

Funds will generally be available on the second business day if …

• The check is for more than $200 (although you can get $200 of the amount on the first business day and the remaining funds when the hold ends).
• You make the deposit at an ATM at your bank.
• You make the deposit after the financial institution’s cut-off time for the day.

It’s possible for a bank to hold a check longer than two business days — the law allows banks to do so in certain circumstances. But the law also says the extended hold should be for “a reasonable period of time” — generally between two and seven business days.

Your bank can keep the check on hold longer, but it must prove that the amount of time is “reasonable.” And it must tell you when you make the deposit (or within one business day if you don’t make the deposit in person) that the hold will be longer, why it’s holding the funds and when the money will be available to you.

Just because your check is on hold, it doesn’t necessarily mean there’s anything wrong. The bank is just taking some additional time to ensure the funds clear before it gives you the OK to use them. Once the hold is over and your check has cleared, you’ll be free to use the money

What does ‘business day’ mean?

By now, you’ve probably noticed we’ve been talking about “business days” rather than “calendar days.” A business day is generally considered 9 a.m. to 5 p.m. local time on weekdays (excluding federal holidays), not weekends.

That means if you deposit a $100 check in your bank account at 11 a.m. on Friday, and that check is drawn on an account at the same bank, the next day your deposit could be available would be Monday (a business day) — not Saturday or Sunday.

Why might a bank put my check on hold?

While it can be annoying to have your funds put on hold, banks hold checks for a reason: to  ensure the funds clear before you spend them. Without a hold, you might end up spending money you think you have — only to find out that the check hasn’t cleared, causing you to  overdraw your account and rack up hefty overdraft fees.

Hold policies vary from bank to bank, but there are some common reasons your check might be subject to a longer delay.

• You’ve recently opened the account.
• Your checking account has been overdrawn too much in the past six months.
• The deposit being made is more than $5,000.
• You make the deposit at an ATM that isn’t owned by your bank or credit union.
• Your bank believes that the check will be uncollectible.
• The check has been redeposited because it was first returned unpaid.

Banks put checks on hold to protect you from honest banking mistakes — and from check scams that can cheat people out of their money.

One common scam works like this: Someone gives you a fake check for more than you’re owed (for example, someone buys something from you online and sends you a check for too much money). Then the scammer asks you to send back the overpayment amount. The scammers’ checks can look just like real checks, and it can take weeks for banks to detect the fraud. While the check is on hold, the scammer hopes you’ll send a real check for the “overpayment” amount before you realize their check was fake.

A check hold is one way the banks try to combat such scams.

How will I know if a check is on hold?

Banks have different policies for when to issue holds and for how long. If and how you’re notified of a hold will also vary by bank. But your bank is required to give you disclosures that detail its check-hold policy and how long a check can be on hold.

If you deposit your check at a bank, your teller should be able to tell you how long the check hold will last and when your funds will be available. After depositing, some banks will issue you a deposit receipt that will include info about the hold and when you can expect the funds to be available.

What should I do about a check on hold?

There’s not much you can do while waiting out a check hold. Your bank will do the work and the funds will be available to you when the check clears. But if you’re concerned about when that will happen, you can contact your bank to see how long it could take for the funds to become available.

Check holds occur often and are out of your control for the most part. But if you keep your account in good standing, you can limit the hold time to only what’s necessary. A bank may hold your checks for additional days if your account has been repeatedly overdrawn. So be sure to monitor your account closely and avoid spending more than your available balance.

Next steps: Tips to make deposits go smoothly

Here are some things you can do that may help your deposit clear as quickly as possible.

• Properly endorse the check.
• Make deposits in person at your bank and be prepared with your ID in case a teller requests it.
• If you make the deposit through an ATM, use one owned by your bank. An ATM deposit could take longer to clear if made through a device your financial institution doesn’t own.
• If you’re making a mobile deposit, take a clear picture of the check (use a well-lit location and a dark background for contrast, and be sure all four corners of the check are visible in the frame).
• Be alert to clues that a check you received may be fake. For example, if the postmark on the envelope doesn’t match the city and state of the bank the check is supposedly drawn on, it could be a fake check. And if you receive a check for more than the transaction amount, don’t agree to refund the overpayment portion — that’s a common check scam.
• Have your paycheck deposited directly into your bank account. Electronic deposits can often be available on the same business day.

In some cases, it may make sense to ask for payment in cash rather than a personal check or business check. Cash deposits are typically available on the day of deposit.