If you plan to deposit a check at noon to pay a bill that's due by 5 p.m., you might need another plan. Those funds may not be available for you to use for days due to holds financial institutions place on deposits while waiting to make sure the transaction clears. Here's how it works.
What Is Funds Availability?
When you deposit or someone else transfers funds into your bank account, the money may not be available for you to use immediately. Funds availability refers to the day you can access deposits to pay bills, make debit card purchases, transfer money to another account or make a cash withdrawal. The time it takes for money to become available depends on the type of deposit, how the funds are deposited and the timing of the deposit.
A simple way to tell whether funds you've deposited are available to use is to log in to your bank account and compare your available balance with your account balance.
- Your account balance is the total amount of money currently in your account. It includes payments and deposits that haven't yet cleared, so it may not be an accurate reflection of how much you have available to spend.
- Your available balance is the amount you can spend now. Amounts that are pending aren't included in your available balance.
Your bank or credit union may not release all of the funds from non-cash deposits over $225 at the same time. Generally, the first $225 will be available on the first business day after it's deposited, and the balance—up to $5,525—will be available on the second business day. Banks and credit unions may place extended holds on amounts over $5,525.
Example: Let's say you deposit a check for $7,500 on Tuesday before your bank stops processing deposits for the day. The first $225 will typically be available on Wednesday, and $5,300 extra will be available on Thursday for a total of $5,525 available. However, your bank or credit union can place an extended hold for a "reasonable" amount of time on the remaining $1,975 under the large-deposit exception.
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Why Do Banks Hold Funds?
Holding funds allows banks and credit unions to verify that transactions will clear, protecting themselves and consumers. For example, if someone writes you a check for $1,000 but they only have $350 in their account, the check will bounce. If the money from that check is available to you immediately, and you use it to pay bills, you could be on the hook for nonsufficient funds or overdraft fees if the transaction later gets reversed.
Regulation CC dictates the maximum amount of time financial institutions may hold different types of deposits before making the funds available to account holders. However, banks and credit unions may release funds sooner. You can check your account agreement for details if you're unsure how your financial institution handles fund hold times.
Maximum hold times vary by transaction type, how the payment is deposited and the location of the issuing and depositing institutions. The following transaction types must be made available by the next business day.
- Cash deposits made in person to a bank or credit union employee
- U.S. Treasury checks deposited in person to a branch employee or at an ATM your financial institution owns
- U.S. Postal Service money orders and checks issued by a Federal Reserve Bank or Federal Home Loan Bank when the deposit is made in person to a branch employee
- Checks issued by state or local governments from financial institutions within your state when deposited in person to a branch employee
- Cashier's, certified or teller's checks deposited in person to a branch employee
- Checks written from an account at your bank or credit union that are deposited in person or at an ATM your bank or credit union owns
- The first $225 of a paper check
Under Regulation CC, automated clearing house (ACH) and wire transfers must also be available by the next business day but are typically available the same day. Funds from cash deposits, U.S. Postal Service money orders, Federal Reserve and Federal Home Loan Bank checks, checks issued by state and local governments, and cashier's, certified and teller's checks must be made available within two business days when deposited at an in-network ATM, and within five business days when deposited at an out-of-network ATM.
There are exceptions to these rules, and some deposits may be held for longer, including deposit amounts over $5,525, deposits made into new bank accounts or accounts that have recently been overdrawn, when redepositing a check that was already deposited and returned, and more. For complete details on when you can expect to gain access to deposits made into your bank account, check your bank or credit union's funds availability policy.
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How to Get Funds Faster
If you don't want to wait days to access the funds in your account, there are ways to get your money faster, including:
- Signing up for direct deposit: Some financial institutions give account holders access to their paychecks early when they set up direct deposit.
- Paying a fee: Some banks give you immediate access to your funds—for a fee.
- Making your deposits early in the day: Financial institutions have cutoff times for processing deposits. Checks and cash deposited before the cutoff time are processed that day, and those deposited after the cutoff time are processed the next banking day.
The Bottom Line
Knowing when deposits to your account will be available is crucial to avoid overdrawing your account when you pay bills, make purchases, transfer money between accounts or make cash withdrawals. But if you don't want to have to watch your account and wait for the available balance to equal your account balance, you may want to maintain a financial cushion. It will give you some breathing room to pay bills and make purchases without needing immediate access to every deposit that hits your account. If your budget is stretched thin and that doesn't feel realistic right now, start small and slowly build up your financial reserves, including an emergency fund to help you weather financial setbacks.