Bank Holding your Deposit Funds / by kevin murray

People work for money, if they didn't, they wouldn't work, so when it comes to money, whether that money is a physical check, wired funds, smart phone deposit, direct deposit, cash, or whatever, when you make that deposit into your banking institution the fact of the matter is, you consider those funds to be your own.  However, that isn't necessarily true for physical checks, especially if the amount is over $5,000 and the check hasn't come from the US Treasury or similar.  In those cases, the big checks, which perhaps you have worked long and hard to achieve, aren't available to you on the day of your deposit, but instead are put into some sort of bizarre "holding" period by the bank.  It's akin to scoring a goal in an important game, only for the video review process to be interminable.


The ability of a bank to essentially freeze your deposit distinctly shows you who the boss is and who the boss isn't.  The law supports the bank so that when you make a deposit of $4,000, by law, they only have to release a paltry $200 of it to you on that day, or on the next business morning depending upon the time of your deposit, and then depending on the time that you made the deposit they can hold the balance of your deposit for an additional day, so that the funds won't be fully release to your bank account until the third business day.  If, the check is larger than $5000 and/or suspicious, they can hold the amount above $5,000 for a "reasonable period of time", making it a calculated gamble for the consumer as to when the full amount of your deposit will be credited and available in your account.  As you might imagine, this can be a real inconvenience for people that have already earmarked that money to pay for tuition, home upgrades, or for a down payment on their car, bills, or the like. 


The height of frustration for a consumer is knowing for a fact that the check that you have deposited is good, but not being able to get your hands on those funds, especially when the news of your bank deposit being on hold is both unexpected and unwelcomed.  While you can certainly try to get the funds released earlier, whether that occurs or not, has a lot to do with the person that you are talking with, how accommodating they are, and your overall "mojo."


The tragic thing is that every physical check has a MICR line at the bottom of the check, which is scanned at the end of the day, sent to a processing house for clearance of said check, and quickly processed through the respective bank systems, to which your bank knows for a certainty whether the check that you have deposited is good and has thereby cleared the funds from the other bank, well before the time periods that they have put your deposit on hold.  The fact of the matter is, it doesn't take longer than 24 hours for a check of under $5,000 to clear in virtually all cases, nor does it take much additional time, if any, to verify whether a check of over $5,000 has cleared or not. 


While banks have the right and fiduciary duty to protect themselves from fraudulent checks and deposits, the game is rigged entirely in their favor, consequently that is why they avail themselves of the flexibility of using other people's money for "float" to enhance their profits while cheating the consumer out of his.