WTF, Bank of America!!!!
June 4, 2010 9:57 AM   Subscribe

What gives with banks putting check deposits on hold for extended periods of time?

I've made a deposit of $4,000.00 on 6/1 with BofA. The teller and the receipt says that the check would be on hold til 6/3. I go to see my statement this morning. It now says that the check is on hold until the June 10. I make a deposit yesterday that includes $395.00 worth of checks. These were put on hold until 6/7. I understand putting large checks on hold for a couple of days. 9 days is insane, especially if I was told otherwise. Small amount checks being put on hold is ridiculous.

Is there a way to fight this?
posted by goalyeehah to Work & Money (14 answers total) 1 user marked this as a favorite
They get to make interest on it for a week instead of paying you interest on it for a week. That is the why. How to fight it? Perhaps change banks to a local lending union instead? Ask around to see which ones don't hold checks for too long before making the switch, I guess.
posted by Grither at 10:07 AM on June 4, 2010

Here are the rules (scroll down a bit for the chart). You'll want to see if your account or deposits fall into any of the exceptions or if it's an account open for less than 30 days.
posted by jedicus at 10:09 AM on June 4, 2010

I have had success speaking to the branch manager in the past, so they do have some flexibility.
posted by TedW at 10:12 AM on June 4, 2010

Seconding get a new bank - or better, a credit union. I've got USAA which is great for a million reasons, but one of them is that checks seem to be available instantly. I don't know how much that is affected by the fact that I'm a member with multiple products and in good-standing, but checks (even scanned in by my phone!) are available immediately and my direct-deposited paychecks are actually available the day before payday (which if I drill in is listed as a pending direct deposit... but the funds are available).

USAA rocks.
posted by alaijmw at 10:25 AM on June 4, 2010 [1 favorite]

Find a bank that doesn't do this. Unless you are well-off (read $$$) convincing the bank manager to release holds is tough.
posted by micawber at 10:33 AM on June 4, 2010

As a former BoA teller, I can vouch for the helpfulness of banking center managers in certain cases. It's worth talking to the manager.

Holds are frequently placed in order to give your bank enough time to verify that the funds being deposited are in the other bank account. As long as BoA can confirm that the money you want to deposit actually exists in the account you'd like to take it from, it should be possible to lift the hold early.
posted by emelenjr at 10:46 AM on June 4, 2010

I don't have a solution for you, I just wanted to drop in and tell you that this was par for the course when I had BofA. I recommend you get a new bank before they really mess things up like they did to me. They are happy to charge you when you make a mistake, but trying to get money from them when they make a mistake is hellish.

I have Chase now, but I really miss WaMu. They knew how to take care of people.
posted by TooFewShoes at 11:28 AM on June 4, 2010

Deposited on 6/1, 6/3 would be the "statutory" limit on funds availability. That is when they would have to make the funds available to you under most circumstances, barring some sort of exception.

The exceptions are things like large deposits, international checks, or suspected fraud. I was going to suggest that maybe it was a large deposit and hence got pushed to the seven-day availability max, but I see from jedicus' link that the "large deposit" threshold is $5k and not $4k as I had thought.

So that leaves the other EFTA exceptions as possible reasons for the delay. Has your account been recently overdrawn? That would trigger the NSF hold. Essentially if you have overdrawn your account, the bank will sit on your deposits longer to make sure they clear before releasing them to you. But if that's not the case, then the only reason left is that for some reason they suspect that the check won't clear the originating bank.

FWIW, I have had this happen whenever I have closed an account and gotten a check for the balance and tried to deposit it into the new account ... something about the originating account being closed sets off all sorts of bells and whistles, apparently.

I'd call up customer service or go to a branch and ask to speak with a manager, and in a non-confrontational way just ask if they can explain why the hold period was extended from the normal 3 to the full 7-day period.

The good thing is that by law they have to give you a thumbs-up or thumbs-down at the end of seven days, so it's not like they can just string you along indefinitely. I try to always pretend as though check deposits will take the full seven-business-day period when I make them, and I put them into my checkbook (Quicken) dated on that seventh day, while I always date checks in my register on the day they're written. The result is that my account balance projections always reflect a worst-case scenario. (When I reconcile, Quicken normally matches the transactions and corrects the dates, so the historical record is accurate and reflects the actual balance on various days.) If you use an electronic account management program this is something you might want to consider.
posted by Kadin2048 at 12:29 PM on June 4, 2010 [2 favorites]

This has been common practice for BofA among several friends who had accounts there - notice the past tense there.

The common theme was that a deposit would be held for multiple days, causing a check to bounce. A fee would result, usually overdrawing the account, which would result in another fee... and so on. One friend racked up $250 in fees before she got the first notice that there was an issue with her account.

I would chalk this up to random banking shenanigans, except A) It was always with BofA, B) It's happened to multiple people who bank there, and C) The timing of the held checks always seemed to create the maximum amount of fees possible for BofA to make money.

I have Chase now, and they've always done well by me. I'm seeing rumblings in the form of policy changes that indicate they may be getting stricter on checking balances, but usually, they credit you the amount of a check up front, and won't penalize you if a check you wrote draws on this. Not that this is a good thing to rely on, but in a pinch, it's nice to know they will take care of you.

Definitely talk to a person in the flesh if you can. It's harder to ignore an upset customer when they are right in front of you, instead of on the phone (esp. when that's what you do all day). Threaten to take your business elsewhere, and do so if they don't make things right.
posted by GJSchaller at 12:46 PM on June 4, 2010

I have nothing but anecdotal evidence to back this up, but I suspect it is a big bank way of getting overdraft fees out of people who don't have or make much money and are therefore struggling at the margin.

My theory is that it is mostly a win win for them with minor risk. Usually, they just make big money on the interest, customers either don't notice, make do, or get frustrated but do nothing. Sometimes they get the bonus of extra overdraft fees on top of it (even better!). Worst case scenario from their perspective, they lose a small number of tiny potatoes customers who either wise up or fall off the grid. The only way there could be an impact would be a mass boycott.

Again, I have no way to prove this, but I'd bet there is a formula for this. Some cocktail of age, average balance, what you spend your money on, how often you overdraft (or get close to zero) determines how likely or how often you will deal with this hassle. They have complicated models to determine your financial position and they do exploit that, it only makes business sense.

If you want the hold removed, call and ask plainly and politely for it. Ask first if the rep on the phone even has the authority to remove it. If not, politely ask for someone who can.

And if you don't see yourself getting mighty wealthy in the very near future, start looking for a bank that is small enough that your business actually matters to them. Big banks suck.
posted by pazazygeek at 2:03 PM on June 4, 2010

I've had success getting my money sooner at local credit unions by talking to the branch manager, and it was things like these that I haven't had an account with a big national bank in years.

If you're in good standing, you might talk to your BoA manager, but I doubt it would do much. My advice is to move your money to a credit union and establish a rapport with the employees there.
posted by malapropist at 3:09 PM on June 4, 2010

BofA doesn't "get the interest" until they get the money. Remember, a check isn't money. It is a note authorizing the holder to withdraw money from a specific account at the named bank.

Your bank, when you present them with a check drawn on another bank, may float you the money. They may not, depending on the check hold rules.

I'm not entirely sure how it works these days- it used to be paper based, where your bank would bundle up the checks it received for payment and send them to the Federal Reserve clearing house. The clearing house then reprocessed them and sent them to the issuing banks, who would check their accounts to make sure the account it is drawn on has the cash, then send the Fed the money, who would then place the money into your bank's account with the Fed. This happens electronically now, but not instantaneously. I *think* it still is done in daily batches, so the banks have a clear daily accounting of their accounts.

The point is, there are a couple of steps along the line that can cause delays. Banks need to keep their daily reserve requirement on deposit with the Fed. If the issuing bank is a little light that day, they may not pay the check right away. If your bank, BofA, is a little light, they might not pull the money out of their Reserve account for a day. They do this not to "make" interest, but not to lose it, since if they don't meet their reserve requirement, they need to borrow the money to cover the shortfall. This is the overnight funds rate. Which is at zero. So, right now, there is no benefit to BofA in holding your money.

More importantly, where did the $4000 come from? Maybe it went NSF and they are waiting a couple of days to present it again. This used to be common practice, don't know if it still is.
posted by gjc at 3:38 PM on June 4, 2010 [2 favorites]

Absolutely, they're playing games, hoping you mess up and they can ding you for insufficient funds. They've tried to do this exact thing with my wife - and it's so blatant it's breathtaking: my wife has had the same account for 10 years, and had direct deposit from the same secure federal government job. Do you imagine that BofA is doubting the federal government is good for the money? From a direct deposit? Yet this is what happens - from time to time, my wife allows the funds in that account to go below $1000 (btw., she's never bounced a check or had insufficient funds) - like clockwork, if it so happens that the direct deposit is scheduled at the time of low funds, mysteriously, the funds are not available for 48 hours (shown as "pending") - even though at every other time, the deposit funds are available immediately. How do you explain that? Clearly, they have some kind of computer program that detects when you're low on funds, and then puts a hold on a concurrent deposit (even direct deposit from the federal government!) hoping that you'll miscalculate when the funds are available, because you're conditioned that the funds are available immediately. Similar situation with me - usually, I have a few thousand in my BofA account, and I regularly deposit checks there (from another BofA account) - but when I was buying a used car, I put it on my AmEx and when I paid that off, my funds dropped to $300 in the account - and I just happened to deposit a check... suddenly, a hold was put on the check for 5 business days! Even though I've deposited the same amounts from the same account for a long time before, and no hold was put on them ever. That in my mind synched it. They're playing games.
posted by VikingSword at 4:09 PM on June 4, 2010 [1 favorite]

Nthing the credit union switch. I had nothing but problems with BofA, including losing deposited checks and refusing to own up to it. I've been with a small local credit union for 15 years and have never had a problem, have gotten lower interest loans than any bank would offer, and am currently looking at a mortgage from them to. Fuck banks.
posted by motown missile at 1:50 AM on June 5, 2010

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