Understanding Reg. CC and the Expedited Funds Availability Act

In all my years working behind a teller line, there isn't any one thing I've had to explain more often to frustrated clients than funds availability, so here's the lowdown on the Expedited Funds Availability Act and Regulation CC.

One general point before we begin: the conditions discussed below only apply when the deposit is made in person to a bank teller. Slightly different rules apply to deposits made by mail or ATM, usually resulting in longer holds.

First let's talk about what type of money typically has next business day availability: cold hard cash; government checks (like tax refunds or Social Security); electronic deposits (like the direct deposit of your paycheck); cashier's checks; U.S. Postal money orders (but not other types of money orders); and checks drawn on the bank where you are depositing funds if account it is coming out of has sufficient money.

Next we move on to local (two business day) holds. A check is considered local if it is drawn on a bank located in the same Federal Reserve region as the bank in which you are depositing the funds. The easiest way to identify this is by second and third digits of the routing number. For example, take a check with routing number 063002346. The digits 63 indicate that it is drawn on a bank located in the Jacksonville, Florida region of the Federal Reserve. So if you're depositing it into another bank in Jacksonville, then it should be a local hold. But if you're depositing it at a bank in San Antonio, Texas, you're out of luck. You would be faced with a....

Non-local (five business day) hold. A check is non-local if it is drawn on bank that is not in the same Federal Reserve region as the bank in which you are depositing the funds. Re-read the paragraph above!

Now let's talk about the exception to the rule. Under certain circumstances, the bank can place an exception hold on your check, for a total hold of seven business days for local checks and eleven business days for non-local checks. This type of hold could be placed if your account is less than thirty days old; if your account is frequently overdrawn; if the check is over $5000; if the bank has reason to believe the check can't be collected, like if it's over six months old or if it's already bounced once; or if it is deposited during emergency conditions, like a natural disaster. Cash and electronic deposits are not subject to exceptions holds under any circumstances.

If the bank places any of the three types of holds on check, they are required to notify you at the time of deposit and release the first $100 of the deposit the next business day.

And, of course, there's a catch. Two, actually. First, the day of the deposit doesn't count, which is why even funds without a hold are next day availability. Second, all the dates are calculated by business days, not calendar days. Some banks "turn over" (switch to the next business day) in the middle of the day so they have time to process all the deposits. In this case, any deposit made after the bank turns over is credited the next business day. If there is a hold placed on that deposit, that day wouldn't count, nor would the next day.

Here's a real world example: ABC Bank turns over at 2 p.m. Sally deposits a non-local check on Monday June 1 at 3 p.m. ABC Bank holds it for five days. Monday 6/1 doesn't count because it is after 2 p.m. Tuesday 6/2 doesn't count because that is the day of the deposit. The count starts on Wednesday 6/3 and continues for four additional business days, releasing on the morning of Tuesday 6/9.

So that's Reg. CC in a nutshell. I hope it is helpful!