What is an account hold?
A temporary account hold prevents you from withdrawing or spending the money straight away. Financial institutions can place a hold on funds in a bank or credit account. This is especially common with check deposits.
The funds may appear in your account as part of your account balance, but this does not mean they are available for immediate spending. The money still needs to clear into your account if they do not show in your available balance.
It’s important to understand the difference between your actual and available balance to avoid issues with your personal finance such as missed automatic payments, bounced checks and your overdraft.
Why do holds occur?
Credit accounts show an immediate increase in your balance after a cash or check deposit. But unless the funds are showing in your available balance, your financial institution will still need to transfer them from the issuing bank into your account.
Holds give financial institutions the time to confirm that those funds will clear before allowing you to spend them. They can ensure that checks are legitimate and will not bounce. This protects them from potential losses and helps you to avoid financial issues if there is something wrong with a deposit.
Holds do not always occur. They are more likely if the deposit is for a large sum of money or is being sent from an out of state bank, as the teller will need to contact the issuing bank to check that the funds are available.
How long can holds last?
Cash deposits that are made in person into a regular checking account will typically not be subject to holds and are often available for immediate spending. Non-cash deposits are more likely to receive a hold. These hold times can vary by financial institutions but typically take between two to five business days.
Federal regulations outline that certain check types must be available in one business day. These include checks from the U.S. treasury, official bank checks, and USPS money orders. This also applies to checks sent from within the same financial institution and for amounts of $200 or less.
Longer hold times can apply under specific circumstances. Your financial institution can place an extended hold on everything above the first $200 if you deposit over $5,000 in checks.
Checks that are redeposited after bouncing, payments into accounts that are repeatedly overdrawn or less than 30 days old, or any checks that raise reasonable doubt from the financial institution can also be subject to increased hold times.
How to avoid account holds
A hold on your bank account can be frustrating. There are several ways you can reduce the chance of your bank or credit card issuer placing a hold on your deposits. If you are receiving a deposit for a large amount, request a payment method that will clear faster, such as wire transfers, cashier’s checks or USPS money orders.
Make deposits at the branch in person whenever possible when depositing into a regular checking account as using ATMs or online banking tools can take longer to clear into your account. Use direct deposits for regular deposits, like paychecks, as financial institutions can accelerate these transfers.