Your bank account isn’t always what it seems. Your money is your money, but there may be times when you can’t tap into it. That is because banks and credit unions sometimes put a “hold” on a deposit. The best way to approach these holds is to know how long they are going in, so you plan for that to avoid an overdraft or other problem.
Just because you deposit a check that you know is legit, doesn’t mean the bank believes it, also. The bank wants to make sure that check will not bounce before crediting you with the money. So expect a hold, but don't expect it to last long. Federal regulations limit how long a bank or credit union can hold your money. Cash you deposit into your account isn't instantly available, either.
Cash deposits usually show up on your balance the fastest. Deposit in person, and the hold should be released after no more than one business day. Deposit at the bank’s ATM or night deposit, and the hold should be released no more than two business days later. Deposit elsewhere or at a non-network ATM, and you can expect the hold to take up to five business days.
To avoid a problem from a hold with your bank, get to know your bank's policy, and plan ahead. When you deposit a check at the bank's window, the money should be in your account the next business day, if the check is drawn from the same bank, and two business days later if it's from another bank. Direct deposits show up the next day, as do government checks.
Typically, the first $200 is available the next business day even if the check is from another bank. If your account is less than 30-days old, the deposit may take longer, but once it has passed the 30 days, the entire amount of money from a check should clear by the next business day.
A bank that places a hold on a check that has already cleared the financial institution from which the money originated should provide you a written notice of the hold. If you feel this isn't being carried out properly, you can file a complaint with the Office of the Comptroller of the Currency's Customer Assistance Group.
Even if there is a hold, however, you should have $200 available the next business day after you made the deposit at your bank. Call your bank anytime you encounter a hold that seems excessive. You can call your local branch. Or, most banks have banking specialists, so take note of their information number when you set up your account, and call if you encounter a problem. You may also send a message via secure online banking, but make sure you're using a secure wifi.
If you deposit more than $5,000 into your bank account, ask your bank about its hold policy. Typically, the first $5,000 is available within one or two business days. It may take longer to get money in excess of that, although usually no more than five business days. Longer periods are allowed, but the bank must be able to show that there is a reason for the longer extension.
If you have repeatedly overdrawn your account, or written checks for more money than you have in your account, then the bank may take longer to release a hold on a deposit. Another reason for a longer hold is if a bank doubts it can collect on a deposited check or a re-deposited check.
Even these holds usually last no more than five business days or one day for a check deposited from the same bank. If you deposit from an ATM not owned by your bank and run into one of these exceptions, the hold may take an extra six business days.
Using a debit card at the gas pump or in a hotel may also trigger a hold on your checking account. Ask the merchant how much the hold is before making the transaction. Holds are used when the total purchase amount isn't yet known and is not easy to return. Your cardholder sets the length of time of a hold. A Visa hold can't last more than 30 days, while American Express is typically no more than seven days.
Merchants set the amount of the hold, although they only receive the final transaction. Ask the merchant to remove the hold as soon as possible. The hold will reduce your available bank balance for the period that it lasts. The same kind of holds can also happen with a credit card, but it temporarily reduces your credit line, not your bank balance, and when the purchase is complete, the difference between the hold and the purchase is credited to the consumer.
Debit card holds at the gas pump usually resolve quickly, while a hotel hold may continue until a day or two after you check out.
If your bank account has been frozen because of credit card debt, medical bills or bank loans, find out why. You should have received bills from the creditor, and notices from the collection agency. Make sure you owed this bill, and try to resolve it as quickly as possible.
The creditor and bank do not have to notify you before your account is frozen. Creditors or debt collectors, however, are required to notify you if they have filed a lawsuit against you and have obtained a judgment against you. If you weren't notified, contact the court making the judgment, and you will have a good chance of getting the judgment vacated.
If you were properly notified, your best option is still to get the judgment vacated. You will need to go to court to do this. Try to get a lawyer experienced in consumer law, and for that, especially if you need financial assistance, the National Consumer Law Center may be able to help.
- 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.
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