Understanding Holds on Checks

Whenever you get a paycheck you typically want it to go into your account as soon as possible. Unfortunately, you may see that when you have a check deposit, you may experience your bank placing a hold on the funds. This hold may surprise you and interfere with plans you had with your money like the ability to pay bills on time, buy groceries, and more.

What Causes a Hold on a Check?

It is important to understand what happens when you deposit a check. While you may think that money gets credited to your bank immediately, that’s not the case. In fact, in order to get credited into your account it must be processed through a central clearinghouse. These central clearinghouses are operated by the U.S. Federal Reserve Bank. Once processed they will either be credited soon after or there will be a hold on the funds of that check.

There are common instances where checks will be put on hold. You may see large checks, out-of-state checks, and insurance settlement checks get put on hold more often than not. Large checks typically get a hold place on them if they are at least $5,000 or more. This is also more common if your current account doesn’t have a lot of money in it. Out-of-State checks usually have a hold placed on them because they need to wait longer to receive funds due to the fact that the institution is located out of state. If you have an insurance settlement check, then you may also see a hold because these checks usually are either disputed or returned which is what triggers an automatic hold. You can also potentially get a hold on the checks regardless of the type. For instance, if your account is new, has had a lot of overdraft fees, or multiple returned checks then you may see holds on any type of check deposit. Not every check is the same, but these are just some common instances where you will see a hold on your funds.

What to Do When There is a Hold?

Depending on the length of the hold and the scenario of the hold, you may be able to speak to a customer support agent that can help. A customer support agent may be able to have a hold be released manually. However, this option is for specific holds and sometimes the only thing you can do is just wait until the hold is released on its own through the bank.

Is it Possible to Avoid a Hold on Funds?

One way to avoid a hold on funds is to deposit a cashier’s check instead of a normal check. These funds are guaranteed and typically don’t need a hold (even though some banks still may hold it). There is no for sure way to avoid a hold and it is important to remember why there are holds in the first place. Holds are important when it comes to protecting your account from accidentally being overdrawn if the check gets returned. You don’t want to have to worry about being responsible for funds you spent when you thought your check went through!