When making a deposit, you typically want to receive the funds as soon as possible. However, depositing a check may sometimes result in a hold. The lengths of these check holds can vary depending on the source of the check or the dollar amount the check is worth.
Why do banks put holds on checks?
Check holds are designed to protect both you and the bank. Hold times give the bank time to verify that the check is legitimate and the payee has enough funds to back it up. This is also why the bank may ask for additional forms of verification, such as pay stubs, statements, invoices, etc. Ensuring that your deposit is legitimate can help prevent the check from being returned or overdrafting your account.
There are several reasons why a hold may be placed on a check deposit. Some common examples include:
- Your account is new (active for less than 30 days).
- The check is a large dollar amount.
- There is reason to believe the check you deposited may be returned.
- Your account has recently incurred a negative balance.
How can you avoid a hold on a check deposit?
To avoid having a hold placed on your check deposits or minimize the overall hold time, here are some things to do:
- Establish a good account history with minimal to no overdrafts.
- Maintain regular communication with your bank, especially if you anticipate large deposits.
- Deposit checks during business hours and well before the cutoff time.
- Request payment in the form of a certified check or cashier’s check whenever possible.
What should you do if a check returns?
Although banks may release the funds after you deposit a check, there is still a chance that the check may be returned unpaid. If a check is found to be fraudulent or returned due to insufficient funds, the deposited item(s) will be reversed, and you will be responsible for any negative balance in your account.
What are alternative methods to receive funds quicker?
We understand that sometimes you need to receive funds quickly and holds placed on checks can be inconvenient. To receive funds quicker, you can encourage payments to be made via ACH or wire. Wire transfers typically get to you within one business day. ACH transfers can take between 2-3 business days to be received.
By Michaela Lenahan in Business Banking