Banks sometimes place holds on accounts because of actions of creditors or the placement of pre-authorization charges by retailers. When a hold has been placed on your account, all or part of the funds in your account may not be available to you. This can cause overdrafts and a host of other problems for the account holder. If a hold has been placed on your account, you first need to find out who placed it and why.
Inquire with your bank upon the deposit of any check. The federal government provides guidelines for check holds which your bank must follow and must make clear to you each time a check is deposited. According to the federal reserve any U.S. government issued checks, postal checks, cashier or bank checks and checks issued by the same bank you are depositing with must be cleared by the next business day. All others must clear $100 by the next day but the rest can be held for varying amounts of time.
Request your cash more quickly than the stated guidelines if you would like to shorten the hold time. If you are a regular customer, have large balances in your accounts, have a business account or have been with the bank for an extended period, the teller or his manager will likely work to meet your request. Simply ask the teller when making a deposit and see what she can do for you.
Avoid depositing out of state, international or personal checks for amounts more than $1,000. These checks require more time for the bank to verify and as such your bank is provided more time by the federal government to do so. Holds on these checks can last from five to 11 days depending on the amount and the originator and your bank is only required to release $100 on the first business day after deposit. Checks valued at more than $5,000 are at the bank's discretion. According to federal regulation the first $5,000 of a large check must be released according to the standard rules, with the balance being made available "in a reasonable amount of time."
Contact the hotel, rental car company or retailer who initiated the hold on your bank account. When staying at hotels, renting cars or buying gas and using your debit card to make a payment, retailers will often place a hold on your account to ensure that there are sufficient funds available to cover your purchase plus any additional fees you may incur along the way. Ask how much of a hold has been placed on your account and why.
Request that the retailer remove the hold as soon as possible so that the money can be released back into your account. There is no way for your bank to remove the hold until the retailer has done so. Each retailer has its own internal policy regarding holds and each should explain this to you prior to your purchase. In many cases the rules are not explained and the customer is left without part or all of her account balance for an extended period.
Contact your bank to request a speedy acknowledgement of the release once the business that initiated the hold has released the funds. In most cases the release and acknowledgement process will take a few days, but it can stretch to a few weeks.
Contact your bank as soon as you realize that a hold of any kind has been placed on your account. Call the general customer service number on the back of your bank card or as listed on the bank website. Explain the situation and ask for help in determining why the hold has been placed and who has placed it. Once you know these details your path to removing the hold will be more easily navigated. In some cases the court may grant the creditor permission to seize the funds outright in which case a hold may be placed onto the account until permission has been granted and the funds removed.
Attempt to vacate a default judgment if a creditor has placed a hold on your account for failure to pay a debt. Visit the civil court that governs your area within one year of the time that you received notice of the judgment. Prove that you either missed your court date because you were out of town or otherwise incapacitated, or that the creditor is not entitled to the debt he is trying to collect. If your reasons are valid, a judge will vacate the judgement and allow you to appear in your own defense at a later date. The hold on your account will be lifted and you will again be able to access your money.
Prove that you were never served with a summons to appear in the first place in an attempt to remove the default judgement and the hold on your account. Proving "Improper Service" can be done at any time after the judgment has been levied and requires that you appear in a special hearing and prove that what you say is true. This is not always easy to do, but if it is what really happened there is no other choice. If successful your judgment will be reversed and your account hold removed.
- No bank account in the United States containing $1,740 or less can be frozen by a creditor. The Exempt Income Protection Act of 2009 determined that freezing such accounts caused undue hardship to the account holder and may have rendered him without the means for sustenance. If you have a direct deposit account which receives payment from Social Security, unemployment or other government benefit programs, the limit jumps to $2,500.
- You are at the mercy of company policy and banking holidays when it comes to releasing retailer holds on your account. Consider using cash or credit cards for hotel rooms, gas purchases and rental cars whenever possible to avoid the situation.
- Neighborhood Economic Development Advocacy Program: Frozen Bank Accounts
- Neighborhood Economic Development Advocacy Program: Vacating A Default Judgment (Order to Show Cause)
- University Federal Credit Union: Debit Card Preauthorization Hold FAQs
- USA Today: Swipe that debit card carefully: Hotel holds can tie up your money
- Consumer Reports: As if gas didn't cost enough...
- The Federal Reserve Board: Compliance with Regulation CC
- Kiplinger: Avoid Long Holds on Your Deposits
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