Buzz
On those rare occasions when you receive funds via a traditional check, it’s usually easy to deposit the money into your bank account. You can use mobile deposit, slide it into an ATM, or if you prefer, take it directly to the bank.
However, once you make the deposit, you might find that accessing those funds isn’t as quick as expected. There’s one scenario where it can feel like an eternity to get your money after a check deposit: if your account is new.
Make sure to plan ahead when opening a new bank account
If your account is less than 30 days old, your bank can hold checks for as long as nine business days before releasing any funds to you.
For most people, this isn’t a big issue—how often do you open a new account, anyway?
But if you’ve recently switched banks and weren’t aware of this small catch, you might find yourself stuck waiting to access your funds. Imagine opening a new account for a signup bonus (or because you can’t stand your old bank), depositing your paycheck, and then being unable to use it for over a week?
Fortunately, there’s a solution to avoid this frustration if you want to switch banks but still need quick access to your money.
The same rule that allows banks to hold your money for nine days also mandates that direct deposits be made available to customers the same day. This works in your favor, as most banks that offer cash signup bonuses for new accounts require you to set up direct deposit to qualify for the bonus.
If you’ve just started a new job or updated your direct deposit settings, make sure your new account has been active for at least 30 days to avoid any banking hassles. When switching banks, keep your old account open for a month or two until the holding period expires.
Why banks can hold your money for such long periods
The restriction on new accounts is actually the longest time banks can prevent you from accessing your money after making a deposit. This rule stems from a 2004 federal law known as Check 21. This law allowed banks to process electronic check images instead of physically transferring the checks, speeding up check processing times.
Here are a few additional rules related to check deposits that you should be aware of:
Checks under $5,000 in one day: $200 must be available the next business day, $600 by the second business day, and the remaining amount by the third business day.
There’s an exception for checks issued by federal, state, or local governments, checks from your own bank, USPS money orders, cashier’s checks, and checks under $200. These funds are available within one business day.
Checks over $5,000 in one day: $200 must be available the next business day, $600 by the second business day, and $4,800 by the third business day. The remaining amount is available by the seventh business day.
Direct deposit or wire transfers: Funds are available the same day.
Cash deposits: Funds are available within one business day.
