Why do banks hold checks for 7 days?

General Discussions Forum
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Hey Folks,

I recently deposited a check at my bank, and they told me it would be held for 7 days before the funds are available. This is really inconvenient, and I don’t understand why it takes so long. Does anyone know why banks hold checks for such a long period? Is there any way to speed up the process?

Thanks…

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Hi Jaylen ! The hold allows us (and the bank paying the funds) time to validate the check – which can help you avoid potential fees in the event a deposited check is returned unpaid. Keep in mind, though, that a check may still be returned unpaid after funds have been made available to you.

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You’re right, a 7-day hold on a deposited check can be inconvenient. Here’s why banks do it and some tips that might help:

Reasons for Check Holds:

  1. Fraud Prevention:
  • Check fraud is a real concern for banks. The hold allows them time to verify the check’s legitimacy with the issuing bank. This helps prevent you from accidentally depositing a bad check and spending funds that aren’t there.
  1. Risk Management:
  • Banks need to ensure they have sufficient funds to cover your withdrawal requests. The hold gives them time to collect the funds from the check’s issuer before crediting your account.

Ways to Shorten a Check Hold (Depending on Your Bank):

  1. Account History:
  • Banks may consider your account history when applying check holds. If you have a long history of responsible banking and no bounced checks, they might shorten the hold time for future deposits.
  1. Account Type:
  • Some account types, like business accounts, may have shorter hold times compared to standard checking accounts.
  1. Direct Deposits:
  • If you regularly receive direct deposits into your account, it shows a steady flow of income and might influence the bank to shorten your check hold.
  1. Cashier’s Checks/Money Orders:
  • These are generally accepted by banks without a hold because they are guaranteed by the issuing financial institution.
  1. Smaller Deposits:
  • Breaking down a large check into smaller deposits might mean shorter hold times on each individual deposit (check with your bank’s policy).

Tips for Faster Access to Funds:

  1. Talk to Your Banker:
  • Explain your situation to your bank representative. They might be able to offer alternative solutions or expedite the hold based on your specific circumstances (e.g., proof of income or urgent need for the funds).
  1. Ask About Online Check Deposit:
  • Many banks offer mobile banking options that allow you to deposit checks electronically using your smartphone camera. These deposits might have faster availability times compared to traditional paper check deposits (check your bank’s policy).
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As a banker, I can tell you that paper checks are put on hold for various reasons. Most likely, it’s because you haven’t received a check from this company before. If possible, try to deposit your next check in person. The bank is also legally required to notify you when they put a hold on a check, so if your address is correct in their system, keep an eye out for that notice.

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Currently, there is a significant amount of paper check fraud, costing banks thousands of dollars. Banks are now holding a large number of checks. Since it’s a fresh check, they might not consider it typical. It is more likely to have a hold because it sounds like you don’t have the money to pay the balance in the event that it bounces. It would be preferable if you spoke with a branch manager and personally deposited your cheques.

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Checks are kept on file by banks to ensure money and stop fraud. Especially for large or out-of-state checks, this process may take some time. You might try mobile deposits or enquire about the unique policies of your bank to expedite the process.