Picture this: you just deposited your holiday bonus check through your bank’s mobile deposit system. Then, within a few hours, you try to spend money or withdraw cash from your checking account, but your bank won’t allow you to. You find out that they’ve placed a hold on your account due to the large check you deposited, even though they’ve already credited the full amount of the check into your account.
When the bank places a hold on your account, it can feel like they’re unjustly preventing you from accessing your own money. In reality, they’re working to ensure that both you and the bank are protected from fraud. Below, we’ll go through what bank account holds are, why they exist, and what account holders can do if they experience one.
If you’re dealing with an unjust bank account hold or you’re experiencing financial hardships, the Louisville bankruptcy attorneys at O’Bryan Law Offices are here to help. Call us at 502-339-0222 to discuss your financial situation with a bankruptcy attorney on our team–at no cost to you.
What Is a Hold on a Bank Account?
A hold on a bank account is a temporary delay in a person’s ability to access the money in their account. In many cases, the bank will simply prevent the user from accessing their funds while they validate a large check or confirm a large debit card purchase.
After someone deposits a check, the bank credits their account for the full amount of the check. However, even if the holder’s account immediately indicates that the money has been deposited, the bank may still be in the process of validating the check and transferring the funds to their account.
Why Do Banks Place Holds on Bank Accounts?
Banks primarily place holds on bank accounts to prevent fraud. If an account holder tries to deposit a suspicious check, their bank may place a hold on their account. While the hold is in place, a bank employee will usually try to verify whether or not the check is valid. Holds can occur if the check is:
- Over six months old
- Larger than $5,000
- From an unrecognized or out-of-state bank
If the bank cannot verify the check’s validity, the check is too old, or if the issuing account has insufficient funds, the deposited check may be considered uncollectible and may “bounce” back to the person who issued the check. This means that the bank will deduct the amount of the check from the account holder’s available balance, and may collect a non-sufficient funds (NSF) fee, usually $35, from the holder’s total account balance.
How Long Do Bank Account Holds Last?
For most bank deposits, the funds will be made available the next business day, but if the deposit is large enough to trigger a hold, the funds may not be made available for a few more days. Holds on bank accounts usually only last between two to five business days.
There are certain exceptions to this, with some bank account holds lasting longer than just a few days. It’s also important to note that bank holidays could extend this waiting period, so if you plan on depositing a large check or making a major purchase with your debit card, be sure you don’t do so right before a federal bank holiday.
How Soon Must the Paying Bank Make My Funds Available?
It depends on the nature of the deposit. Normally, all cash deposits and check deposits under $200 will be made available to you within one business day. If the check is over $200, the first $200 will be made available to you within the next business day, and the rest will be made after the deposit is verified.
How to Remove a Hold on Bank Account
Unfortunately, it can be difficult to remove a hold on a bank account, but there are a few things you can do to help determine exactly why there’s a hold on your account.
Contact Your Bank
The first thing you should do is contact your bank directly. When you contact the bank, be sure to have your account information and any relevant documentation ready, such as your recent account history or any notices or letters related to the hold.
Usually, if there’s a pre-authorization hold on your bank account due to a debit card transaction, calling your bank to verify that you made the purchase could fix the issue. If the hold is related to a check verification, the bank will inform you about the situation and may be able to provide you with an estimated processing time.
Wait Out the Hold
After calling the bank, you may be able to wait until the hold is removed. If the hold is due to a large check, the bank will eventually figure out whether or not the check was valid, allowing them to remove the hold and take any necessary action. Remember, these holds are designed to protect customers from fraud, so it’s important that the bank is able to verify checks or purchases before they go through fully.
Look at Your Bank Policy
If you can’t get through to the bank, but you want to know why there’s a hold on your account, you should look at your bank policy. Due to the Expedited Funds Availability Act, your bank is required to disclose its policies on account holds. This can help you identify exactly why your bank would place a hold on your account.
Can I Remove a Bank Account Hold Myself?
No, unfortunately, you cannot remove a hold on your bank account yourself. The best ways to expedite the process are by contacting your bank or by taking steps to prevent holds from happening in the first place.
How to Prevent Holds on Bank Accounts
Preventing holds can lead to a smoother banking experience and greater peace of mind when managing your money. There are several ways you can prevent the bank from placing a hold on your account, like depositing checks in person or having your payroll deposit made through direct deposit.
Direct Deposits for Paychecks
One way to prevent the bank from placing a hold on your account is by ensuring your paycheck is deposited through direct deposit. By doing this, your salary will be electronically transferred directly into your account regularly. Banks often trust automatic payments like this, making it less likely that they’ll place holds on these funds.
Contact your employer’s HR department or payroll provider to initiate direct deposit if it’s not already in place. This ensures that your funds are available without delay and helps you avoid potential hold-related inconveniences.
Use Official Checks for Large Deposits
When making large deposits or looking to transfer extra money into an account, consider using an official check or certified check to deposit the money. These checks are issued by the bank and are considered more reliable and secure than personal checks.
Since they are typically seen as guaranteed payments, depositing an official check into your account can reduce the chances of a hold being placed on the funds. Be sure to consult with your bank regarding any applicable policies or fees related to official check deposits.
Deposit Money in Person
Another proactive measure to prevent holds on your bank account is to make deposits in person at your bank’s branch. If you have an official payment app linked to your account, it can feel more convenient to deposit a large check digitally. However, this can easily trigger a hold and make it harder for you to access your funds.
When you physically deposit cash or checks with the bank, the teller can often verify the legitimacy of the funds on the spot, reducing the likelihood of a hold. Additionally, in-person deposits can expedite the processing of your funds, ensuring quicker access to your money.
It’s important to remember that depositing cash in large amounts may still trigger certain bank policies, so be sure to check with your bank beforehand to understand their guidelines for cash deposits.
Contact a Kentucky Bankruptcy Lawyer at O’Bryan Law Offices
If you ever have trouble accessing your current account balances, it’s important that you take the time to verify why the bank has placed a hold on your checking or savings account. Dealing with larger financial problems? The experienced bankruptcy attorneys at O’Bryan Law Offices are here to help. With our extensive knowledge of bankruptcy and financial-related litigation, we can help ensure that you and your financial future are protected from harm.
Call us at 502-339-0222 or contact us online and schedule a free consultation to discuss your case with a legal professional on our team.
