When money is not avail­able af­ter cheque de­posit

The Punch - - PERSONAL BANKING - Hold­ing de­posits Watch the cut-off time

When you de­posit a cheque, you prob­a­bly just ex­pect the money to show up in your bank ac­count — and you ex­pect to be able to use that money when you need it. In most cases, that’s ex­actly how it works and there are no prob­lems, ac­cord­ing to www.the­bal­ance.com.

Un­for­tu­nately, some­times there is a prob­lem: your bank puts a hold on the money, and you’re un­able to with­draw cash or spend when you need to. Your bank’s funds avail­abil­ity pol­icy, along with fed­eral reg­u­la­tions, spells out ex­actly how long ev­ery­thing is sup­posed to take.

Funds avail­abil­ity

A funds avail­abil­ity pol­icy ex­plains how long you need to wait to spend or with­draw funds af­ter you make a de­posit. Banks are re­quired to pro­vide this in­for­ma­tion so that you are not caught by sur­prise, al­though most peo­ple never know about these poli­cies un­til they’re stuck wait­ing for funds to clear.

The de­tails about your bank’s pol­icy should be part of your ac­count agree­ment or in­cluded in other dis­clo­sures pro­vided by your bank.

When you de­posit funds to your ac­count, the bank of­ten puts a hold on those de­posits, mean­ing you need to wait at least one busi­ness day be­fore you can use the money. Es­pe­cially with cheques and money or­ders, banks can­not be sure that a pay­ment is le­git­i­mate, plus the money doesn’t ac­tu­ally ar­rive at your bank for sev­eral busi­ness days (or more) af­ter you make your de­posit. The hold is in­tended to pro­tect the bank from los­ing money.

These holds also pro­tect you to some ex­tent, but you are ul­ti­mately re­spon­si­ble for any de­posit you make to your ac­count. If your bank al­lows you to cash a cheque that later bounces (which can hap­pen sev­eral weeks af­ter you make the de­posit), you’ll have to pay fees and you’ll have to re­pay the bank for the money they gave you – even though none of it was your fault.

That’s why it pays to ver­ify funds on sus­pect cheques, and avoid tak­ing pay­ments from any­body you don’t trust.

Hold­ing times

Fed­eral reg­u­la­tions limit how banks can set up their funds avail­abil­ity poli­cies. Banks are al­lowed to be less strict if they want — they can make funds avail­able im­me­di­ately, and they of­ten do so — but they can­not hold funds for­ever.

If there is a hold on your de­posit, the bank should pro­vide you with the re­lease date on a re­ceipt. In some cases, they add a hold later (and mail you a no­tice), so it’s a good idea to check your ac­count be­fore spend­ing if you’re run­ning low on funds.

next busi­ness day: Most banks say that they “gen­er­ally” make funds avail­able on the busi­ness day af­ter you make a de­posit, but there are ex­cep­tions. Cash de­posits made to a bank em­ployee must be made avail­able within one busi­ness day (and those de­posits are of­ten avail­able im­me­di­ately). Cer­tain types of cheques must also be avail­able in one busi­ness day: If the to­tal amount of de­posits by cheques in one day is more than n50,000, or if a cheque is en­dorsed by any­body other than the payee to whom it was is­sued, banks can add a hold.

Elec­tronic de­posits like wire trans­fers and di­rect de­posit are also gen­er­ally avail­able within one day.

Longer hold times

The reg­u­la­tion, which sets rules on how quickly banks need to re­lease your funds, al­lows longer hold times under cer­tain cir­cum­stances. These are of­ten called ex­cep­tions.

When an ex­cep­tion ap­plies, the bank may hold funds for a “rea­son­able” amount of time. That time is not specif­i­cally de­fined, but five busi­ness days or so is about as long as you should have to wait.

Rede­posited cheques: If a cheque is rede­posited (be­cause it bounced when it was first de­posited), the bank can add a longer hold.

You should also be con­cerned about those cheques.

Re­peat­edly over­drawn ac­count: Over­draw­ing your ac­count (or spend­ing more money than you have avail­able in the ac­count) doesn’t just cause hefty bank fees – it can also lead to holds on your de­posits which makes it even more likely that you’ll go into the neg­a­tive.

Rea­son­able doubt: If the bank sus­pects that the cheque will not be hon­oured, they can add ex­tra hold time. Com­mon rea­sons in­clude post-dated cheques and cheques that are more than 60 days old.

new ac­counts: Brand new ac­counts are es­pe­cially risky for banks. If your ac­count is less than 30 days old, ex­pect to have cheques held for up to nine days. how­ever, elec­tronic pay­ments and of­fi­cial cheque should have at least par­tial next-day avail­abil­ity.

Re­mem­ber that busi­ness days are stan­dard week­days. Week­ends and fed­eral hol­i­days that fall on week­days will slow down clear­ing times.

It’s al­ways im­por­tant to de­fine your terms. When you de­posit a cheque, you prob­a­bly think you did it “to­day.” how­ever, banks set cut-off times that might be as early as midafter­noon where you live. When mak­ing an im­por­tant de­posit, ask the teller what to ex­pect in terms of any holds (again, your re­ceipt should tell you as well).

If it’s late in the day, you might be bet­ter off de­posit­ing at an ATM or through your bank’s mo­bile app (by snap­ping a photo of the cheque) — those meth­ods of­ten have later cut-off times. how­ever, that strat­egy can back­fire: be­cause you’re not mak­ing a de­posit in per­son to a bank em­ployee, other com­pli­ca­tions can arise — es­pe­cially at ATMS that don’t get an im­age of your check. Those strate­gies are best when you don’t need all of the money and your ac­count is in good stand­ing. Ask cus­tomer ser­vice what’s best in your sit­u­a­tion.

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