With today’s technology, you can transfer funds over the phone and deposit your checks without ever going to the bank. Before the money actually becomes available for withdrawal, however, financial institutions can place holds on deposited funds, allowing them time to confirm that the money is actually there. Banks are responsible for following the federal guidelines put forth by Regulation CC, Availability of Funds and Collection of Checks, with availability dependent upon the time of day, type, source and amount of the deposit.
Cash and Cleared Funds
Most institutions allow for the immediate availability of cash deposited in person to a bank employee, with federal regulations requiring next-day availability. When you make a non-cash deposit, that amount will be credited to your account before the bank receives the money. The credit will show the same date as the deposit and will be cleared later, usually to be made available on the following business day. Your bank will post its procedures relating to cleared funds with the availability of your money measured in business days, defined as Monday through Friday except most federal holidays. Cutoff times may also apply that vary from branch to branch.
Moving money from one bank to another without actually exchanging paper notes is the fastest method of depositing money. Electronic Funds Transfer, or EFT, includes wire transfers and the widely used direct deposit, where payroll is deposited directly into an employee account. The Federal Reserve Board considers an electronic payment received when your institution has both the payment and the information on the account with the amount to be credited. In general, most financial institutions allow for immediate availability of these funds, though some require a 24-hour holding period depending on the day and time the deposit is made.
According to a Federal Reserve study of non-cash payments, 97 percent of all checks are handled electronically at some stage of the deposit process. But just because the checks are cleared faster doesn’t necessarily mean the money will be available faster. State or local government checks and those drawn on your local institution and deposited in person must be made available on the first business day following the banking day of the deposit. Your institution can make exceptions for large checks, non-local checks and deposits not made in person. If you use an ATM, for example, funds will take an additional business day to clear, unless the bank does not own the ATM, in which case the number of days may increases up to five.
The Federal Reserve Board defines a large deposit as one greater than $5,000, and restrictions on availability do not apply to cash or electronic deposits. For checks, your bank must make the first $5,000 of a large deposit available following its normal availability policy and the rest should be released in a reasonable time frame, according to posted guidelines. This can mean anywhere from one to 11 additional business days, depending on the origin of the check. Most institutions can release a portion of the deposit for immediate use, though special rules might apply for re-deposits, new accounts and business accounts.
For more than 10 years, Carol Butler has run a small, off-grid furniture business with her husband and is a regular contributor to the Edible community of magazines. As staff writer for RichLife Advisors, she covers financial planning and other industry-related topics. She holds a B.F.A. in theater arts.