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Checking Account Hold

How Holds Work

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Does your bank place a hold on your funds? It’s important to know how a hold works, what can cause it, and what your bank’s rules are. Most importantly, you need to know how to keep your bank from freezing your entire account.

Overview

A checking account hold serves to let the bank know for sure that a deposit is legitimate. When you deposit a check to your account, your bank may not want you to take the money out immediately. Instead, they place a hold on the deposited funds until the funds actually arrive.

Typically, your bank will credit your account to show the deposited funds as part of your balance. However, you won’t see those dollars in your “available” funds until the hold is lifted. In other words, these funds aren’t available for you to take as cash, and a check written against those funds would bounce.

How Long are Holds?

Holding times will vary due to several factors. The main factor is the source of the check. For example, checks written by the US government might have a shorter hold – or none at all – because the bank assumes that the check will actually be paid. Personal checks and out-of-state checks can have longer hold periods.

Even though technology has given banks the ability to verify funds more easily, hold times still hover around 5-10 business days.

Account Holds

Sometimes your financial institution may place a hold on your entire account. This may happen due to a large deposit or deposit of foreign funds.

I know it sounds crazy, but a deposit with certain characteristics can result in a hold on the entire balance – not just the amount of the deposit in question. Make sure you keep up with your bank’s policies to know when this might happen. That way, you can time your transactions so that your bills get paid before the hold is placed.

What’s the best way to avoid this hassle? Talk with a banker while you’re opening especially important accounts. Tell them exactly how you plan to use the account: how often you’ll deposit and withdraw, size of transactions, and source of funds. A good banker will recognize account features that will make you a happy customer.

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