banking

When does a deposited check clear?

Don TaylorDear Dr. Don,
What is an ATM "deposit hold adjustment"? I deposited a $1,500 check from another bank at my bank's ATM a day ago and it has not made it into my account. The bank says it has a "hold adjustment" debiting for $1,000. What does this mean? Will I ever get the money?

Thank you,
-- Winnie Wantsmycash

Dear Winnie,
Good questions! By the time you read this, you will have your money. Even so, people need to understand hold policies because they determine when they have access to funds. Writing checks on money that hasn't cleared holds can create problems, including fees for bounced checks and marks on consumer banking reports.

Hold policies are determined by the Federal Reserve. In general, a hold on a deposit ensures a check you deposited had funds available to clear the payer's bank account.

The time of day you deposited the check into the ATM will influence the length of the hold. If your bank has a cut-off time of 2 p.m., and you deposited the money in the ATM at 3 p.m., it's considered deposited on the next business day.

A local check deposited in a proprietary ATM can have a partial hold for up to seven business days. A partial hold means that some, but not all, of the money is available. In your case, you had $500 available to you, with a hold placed on the remaining $1,000.

Banks generally know the rules, and that includes the need to disclose their hold policies to customers.

The Federal Reserve's publication "Compliance with Regulation CC" tells us this: "Regulation CC requires that financial institutions provide customers who have a transaction account with disclosures stating when their funds will be available for withdrawal; many institutions use the model disclosure statements included in Regulation CC."

This may not apply to you. But one of the reasons consumers shouldn't live paycheck to paycheck is that they need a cash cushion or an emergency fund. Having one will help avoid bouncing checks and paying bank fees when a check doesn't clear right away.

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