Bank is keeping my money!

April 14, 2011 1:11 PM

How long can my bank hold a deposit?

I bank at Bank of America in Maryland and my husband made a deposit on Tuesday (not a large deposit) that had two cashiers checks and a rent check from our basement tenant. Wednesday morning the bank decided to place a hold on 75% of the deposit. We called to ask what it was about and the supervisor told us they would mail a letter that would explain it all, but no one could explain it to me except that the full deposit should be available on Friday. Is it legal for them to hold this and for how long?

posted by Shark Tail to Work & Money (15 answers total)

Response by poster: Certified cashiers check from Chase Bank
posted by Shark Tail at 1:15 PM on April 14, 2011

From the BoA website:

What does it mean if I receive a hold on my account after I have made a deposit?

A hold means that although we've received your check for deposit, you won't be able to use the funds until the hold period has expired. Hold periods are typically two to five business days, and may extend longer in unusual circumstances. If the deposited item is returned unpaid before the hold expires, those funds will not be made available to you. If the deposited item is returned after the hold expired, we charge your account for the amount of the item. Holds are placed to help protect both you and us from losses that could occur when a deposited item is returned unpaid.
Situations that typically cause a check to be held include:
There is reason to believe the funds may be uncollectable
The source of the check, such as foreign checks
The account is a new account, new account rules apply for the first 30 days the account is open.
The account has repeated overdrafts in the last 6 months
The check is in an amount greater than $5,000 or larger than you normally deposit
Fraud is suspected
The check was previously deposited, then returned unpaid
The check was not properly endorsed
Emergency situations, including computer or communication failure
Incorrect routing or account number information on a deposit slip
We notify you at the time of the deposit or send you a notice by mail if we place a hold on your deposit. This hold notice helps prevents you from inadvertently overdrawing your account.
If we place a hold on a deposit you make at a Learn more about banking center, your teller will provide you the hold notification at the time of the deposit. If we place a hold at an ATM, most often we will notify you on the receipt. If we place a hold at a later time, we'll send you a notice by mail.

Emphasis mine - that's my guess. This happened when I deposited a $10,000 check; it took about a week to clear (different bank).
posted by desjardins at 1:18 PM on April 14, 2011

Mod note: This is not and will not become the "I hate BofA" thread, please restrict comments to ones that answer the OPs question, thank you.
posted by jessamyn (staff) at 1:22 PM on April 14, 2011

These are not decided by humans but by computer analysis. They have numerous rules that combine into a decision to hold or not to hold. These include things about you, the other party, and the details of the specific deposit. When the customer service agent told you that they didn't know why, they weren't lying.
posted by buzzv at 1:26 PM on April 14, 2011

desjardins posted a good list of reasons, and Wikipedia has a table showing the maximum hold period.

It's not personal, they're not keeping your money-- the funds will be available to you when the hold period expires. These rules were put in place largely to deal with fraud issues, and fraudulent/counterfeit cashier's checks are not uncommon.
posted by Kpele at 1:33 PM on April 14, 2011 [1 favorite]

Usually takes a few days, at most. It's part of their normal, algorithmic anti-fraud procedures. Sure, you gave them what looks like a cashier's check, but until it clears, they won't know that what you gave them was actually a cashier's check instead of a clever forgery. People still do that, believe it or not.

This is perfectly legal, and a two-day turn-around is entirely reasonable.
posted by valkyryn at 1:38 PM on April 14, 2011

I had this happen to me at B of A after a large deposit. They held it for 9 days. After I let them do that I realized that most bank transactions can be cleared instantly by electronic means, so I think it is just one way banks make money by using other people's money for free. Years ago, before the internet, they needed the time, but not today. They are not being honest.
posted by nogero at 2:09 PM on April 14, 2011

Yes, nogero, it's known as value dating and is SOP - and used to be in Europe, too, until November 1, 2009 when it was abolished as part of SEPA.
posted by likeso at 2:35 PM on April 14, 2011

It is possible to convince a bank (I can't speak for BoA) to waive the hold period. I once had a check held because it was from overseas, yet it was on a branch of the same bank doing the holding. When I complained about this, the hold was removed.
posted by Obscure Reference at 3:20 PM on April 14, 2011

Fake cashier's checks exist. The bank it appears to be from doesn't matter. They just want to make sure it clears.
posted by Slinga at 3:46 PM on April 14, 2011 [2 favorites]

(Disclaimer: I worked as a bank teller six years ago, not at BoA but a similar institution, so my info isn't necessarily up to date, however...) A three day hold on a check if it's drawn from a different bank is totally common and reasonable. If I recall correctly (and, okay, it's been six years), three days was the standard hold for a local personal check drawn from a different bank, and the standard hold was even longer if the check was non-local. So I'm thinking... relax.
posted by telegraph at 7:26 PM on April 14, 2011

After I let them do that I realized that most bank transactions can be cleared instantly by electronic means, so I think it is just one way banks make money by using other people's money for free. Years ago, before the internet, they needed the time, but not today. They are not being honest.

Bank transactions are NOT cleared instantly. There is a lot of stuff that happens behind the scenes, primarily, each bank does their books at the end of the day and wires money to the local federal reserve bank, which wires money to wherever it needs to go. Up until very recently, and possibly still in some cases, this happened via couriers carrying computer tapes around.

Every night, the bank's books need to balance (of course) and they need to be at the correct reserve percentage. If they are having a spell where a lot of people are depositing checks and wanting the cash right away, they can go below their reserve requirement and need to borrow money from the fed to stay kosher. Which they aren't going to do, since you aren't a paying customer. (The general you; checking customers almost always aren't profitable. It's not like anyone pays for a checking account.)

Or, they put holds on some of the checks to close the gap between when they have to hand out cash and when they get it back from the issuing bank. Because even though the "money" is in your account, it isn't in the bank's hands for a few days.

Similarly, if the issuing bank is a little short, they might not pay the check for a day or two.

I'm almost sure it is frowned upon, if not illegal, for a bank to maintain the hold once they have received the money.

Think about it like this: you are giving them an IOU, and asking for cash before they know they will get paid for the IOU. You are basically asking them to loan you some money based on a piece of paper. They are usually willing to do this if it is normal for your account, but not so much if it isn't.
posted by gjc at 8:32 PM on April 14, 2011

Forgot to emphasize: the check you presented them isn't money. Checks aren't legal tender. BoA doesn't have your money until the bank the check(s) are drawn on pay them.
posted by gjc at 8:36 PM on April 14, 2011

Response by poster: Thanks for all the answers. This has never happened to me before and I don't believe any of the situations described on BofA's website or the wikipedia page apply in this situation (I can't tell what they think is going to be fraudulent). I guess what irritated me more was that no one could tell me what was going on and that I have to wait for a letter to be mailed.
posted by Shark Tail at 8:44 PM on April 14, 2011

Just one more point of anecdata: I bank with BoA (not for long, opened another acct with a credit union yesterday) and recently deposited 3 personal checks through the ATM without endorsing them. I hadn't dealt with checks in so long, it just slipped my mind. I freaked out and immediately called the bank. The cs rep told me it wasn't any big deal at all, that they really don't care if you endorse the checks or not, my name was on the check and on the account, so it really didn't matter. They didn't hold the checks, which were all personal checks for relatively small amounts (less than $100 each) and 2 were drawn on non local banks.

So, apparently it's rather arbitrary whether they decide to hold the checks or not, since their policy states that they will if the checks aren't endorsed, which mine weren't.
posted by hollygoheavy at 4:32 AM on April 21, 2011