When the Bank Won't Let You Withdraw Your Money

Nearly everyone has run into the frustrating experience of trying to withdraw money from their bank only to be told that there is a "hold" on their recent deposit and the funds cannot be withdrawn. What most depositors, and many bank employees, do not know is that federal law strictly limits when and for how long a bank can place a hold on deposited funds.

Regulation CC balances the bank's interest in making sure it can collect deposited checks with the customers' rights to have access to their money. Before any hold can be placed on funds the bank must give notice to its customer at least 30 days earlier that deposited funds may be held. That availability policy must be included in the documents when the customer opens the account or in a later amendment, posted in a place likely to be seen before customers make deposits, and a statement that funds may not be available for immediate withdrawal must be included on pre-printed deposit slips the bank provides to its customers.

The Regulation also restricts the terms of banks' funds availability policies. These types of deposits must be available to you on the next business day:

a. Cash

b. Electronic payments to your bank

c. Post office money orders and U.S. Treasury checks, such as tax refund checks, which are payable to you

d. State or local government checks from the same state as your bank and that are payable to you

e. Cashier's checks and certified checks that are payable to you

f. Checks drawn on your bank

g. The first $100 of any deposit

Your bank can make funds available sooner, but no later, than the times provided in the Regulation. For other types of checks you deposit, funds from "local" checks must be available by the second business day after the deposit and "nonlocal" check proceeds can be held for five business days.

Making a deposit in your bank's ATM can add another business day to all of these time limits. If the ATM belongs to another bank, it could cost you four business days. Delays can be six business days or longer under certain circumstances. If the bank places an extended hold on the funds it must provide you a notice explaining why and the date the funds will be available to you. For the quickest access to your deposited funds, follow a few simple guidelines:

1. Go into the bank and make the deposit with a teller.

2. Ask if the bank uses a special deposit slip for the type of deposit you are making.

3. If possible, do not deposit more than $5,000 in the bank in a single day (even if to more than one account)

4. If making a deposit to an ATM make sure that it is an ATM owned by your bank.

5. Make deposits to an account that has been open more than 30 days.

6. Avoid overdrafts in your account.

If you bounce a check because the bank put an extended hold on your deposit and it did not provide you a notice that it had imposed an extended hold, it cannot charge a fee for your returned check. Check your account statement. If an overdraft fee was charged request in writing that the bank remove it.

Banks often make mistakes regarding holds on deposits. If necessary, ask to speak to the branch manager. Any unresolved complaints should be made to the Consumer Help Department of the Federal Reserve Board. Regulation CC provides important consumer protections but only if you know your rights.

Sources:

Regulation CC, 12 C.F.R. 229, subpart B, available at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=94a03dbddb284e37f69617d4a926399e&rgn=div6&view=text&node=12:3.0.1.1.10.2&idno=12

http://www.federalreserve.gov/consumerinfo/agency.htm