Bank deposit on hold

[mynameisjonas]

We deposited a large check to our bank (proceeds from the sale of our house if it matters) and the bank has a hold on most of it. How long can they hold it? Are there any regulations around that? Seems like they could just sit on it a while to collect interest and/or avoid paying us interest.

If you bring them the closing statement from your sale of your house they can match the check with that amount and the settlement agent, they may just released at hold immediately. I would ask a manager.

 

[Mr Janny]

The 3 signposts on the Dave Ramsey path to financial stability are:
1) Always pay cash for vehicles
2) If you get into a debt snowball fight, always aim for the face.
3) Avoid your bank's "on hold" policy by never making deposits greater than $500.

Simple rules for success, folks.

 

[Sousaclone]

The 3 signposts on the Dave Ramsey path to financial stability are:
1) Always pay cash for vehicles
2) If you get into a debt snowball fight, always aim for the face.
3) Avoid your bank's "on hold" policy by never making deposits greater than $500.

Simple rules for success, folks.

If someone asked me to write them multiple $500 checks I'd probably pay the money to rent a dump truck and pay them back in pennies...

 

[Bipolarcy]

We deposited a large check to our bank (proceeds from the sale of our house if it matters) and the bank has a hold on most of it. How long can they hold it? Are there any regulations around that? Seems like they could just sit on it a while to collect interest and/or avoid paying us interest.

Standard hold is a week. I always thought it was crap in the age of digital transfers that they have to hold your money to verify the check is good. My bank used to hold all my larger, unexpected checks for a full week. Checks from an insurance settlement, or from a 401K withdrawal/loan, for instance. But the last large check I got from an insurance company for a little fender bender I had was cleared right away. I guess I've been with them long enough that they trust me. (Doubtful) But I also had enough funds in the bank to cover the check if it should turn out to be bad. I think that's the key.

 

[Proton]

That's misleading. I did BSA and compliance work for a small bank in Kansas City. Currency Transaction Reports only apply to cash deposits. Electronic deposits do not qualify under this rule. Additionally, CTRs are a reporting mechanism, not an investigation mechanism. There are other things that are done for investigations, such as Suspicious Activity Reports (SARs), Financial Crimes Enforcement Network (FinCEN), as well as periodic account reviews that are used to detect illicit activity.

There could be several reasons outside what I describe above for withholding the full amount. But I think the primary function is to make sure fraud doesn't occur. Essentially, what people do is that they will open an account at a bank and deposit a check for a relatively small amount, lets say $1,000. When the check is deposited, the "customer" withdraws the entire amount made available to them, lets say $200. Later, the bank discovers that the deposited check was invalid because the bank account where the check originated from doesn't have enough money to cover the deposited check at account opening. Thus, the bank looses the $200 that was withdrawed by the "customer."

At my bank, we hired a full time BSA person from another bank in Kansas City. They had a big problem with the above happening at their bank. Despite repeated attempts by the compliance staff to stop the fraud, the bank wanted to continue to allow full withdrawal amount of deposited checks in order to grow their customer base.

Very interesting. Seems like the fraudsters would be too easy to identify for this to be worth it, but what do I know?

 

[I@ST1]

Standard hold is a week. I always thought it was crap in the age of digital transfers that they have to hold your money to verify the check is good. My bank used to hold all my larger, unexpected checks for a full week. Checks from an insurance settlement, or from a 401K withdrawal/loan, for instance. But the last large check I got from an insurance company for a little fender bender I had was cleared right away. I guess I've been with them long enough that they trust me. (Doubtful) But I also had enough funds in the bank to cover the check if it should turn out to be bad. I think that's the key.

Dave Ramsey says never withdraw or borrow against your 401k. Hope you’re young and didn’t set yourself back 5 years.

 

[Bipolarcy]

Dave Ramsey says never withdraw or borrow against your 401k. Hope you’re young and didn’t set yourself back 5 years.

Dave Ramsey can kiss my grits. I'm retired now and doing well. I'd rather pay myself interest than the bank. It just made more sense to me. I bought most of my cars this way, by taking a loan from my 401K and paying myself 6 percent interest.

 

[Cyclones_R_GR8]

It's been 4 days already

I should add when I made the large deposit they did some sort of check and then gave me a sheet of paper with the dates when partial funds would be available and when the full amount would be available.

 

[jbhtexas]

This is exactly what probably is happening. Banks have to report deposits over 10K as they get flagged for suspicious activity. It's done to prevent potential illegal activity such as money laundering, tax evasion, or even potential terrorist activity. If it's a legit transaction there is nothing to worry about and the hold should be removed as soon as it has been cleared. There are all kinds of things that trigger holds like this in the banking world and it's mostly to catch or curtail illegal activities. Making structured deposits of the same amounts to avoid the 10k limit is another one that could potentially trigger it as suspicious activity. If we've learned anything from the banking collapse of 2008, have excessive checks and balances on banking policies and transactions is a good thing rather than letting them go unregulated or left to self-regulate themselves.

The IRS wants the limit dropped to $600. That should be fun...

Yellen, IRS Push Democrats to Require Banks to Report Taxpayers’ Annual Account Flows

House Democrats didn’t include a bank account reporting provision in their tax bill, declining for now to adopt a Biden administration proposal.

www.wsj.com

 

[BCClone]

The 3 signposts on the Dave Ramsey path to financial stability are:
1) Always pay cash for vehicles
2) If you get into a debt snowball fight, always aim for the face.
3) Avoid your bank's "on hold" policy by never making deposits greater than $500.

Simple rules for success, folks.

If I have to make deposits smaller than 500 from business sales I’ll be broke quickly.

 

[JRE1975]

I thought it was standard to always get a wire or cashier's check for a property closing?

You have to have good funds to the closing agent before the closing happens don't you?

If a bank won't accept a check from a local closing agent that would throw a bunch of red flags on the closing agent, not you!

As someone suggested show a bank manager the closing statement and have him make the funds good. After 4 days they have the funds.

 

[CtownCyclone]

Dave Ramsey says never withdraw or borrow against your 401k. Hope you’re young and didn’t set yourself back 5 years.

Anyone with a brain thinks this. DON'T DO IT.

 

[DurangoCy]

It's been 4 days already

 

[trevn]

We deposited a large check to our bank (proceeds from the sale of our house if it matters) and the bank has a hold on most of it. How long can they hold it? Are there any regulations around that? Seems like they could just sit on it a while to collect interest and/or avoid paying us interest.

A hold is normal for a large check due to fraud. I'd ask the bank what their Reg CC policy is for delaying funds availability. Typically it's a max of 2 days for on us checks and 7 business days for other checks. If they want to hold it longer they would have to prove to you why they are doing that and why the longer time frame is "reasonable" per the regulation.

As others have suggested, I would just call and talk to a manager of some sort. I work at a bank and here I would release funds if the customer was in good standing with us, had a reasonable account balance with us, and the check they deposited appeared to come from a reliable source with a reasonable back story. The other solution would be get it wired or ACHd next time

 

[NickTheGreat]

Dave Ramsey can kiss my grits. I'm retired now and doing well. I'd rather pay myself interest than the bank. It just made more sense to me. I bought most of my cars this way, by taking a loan from my 401K and paying myself 6 percent interest.

I'm pretty sure Dave Ramsey would be okay with you withdrawing from your 401k once retired.

 

[KnappShack]

Dave Ramsey can kiss my grits. I'm retired now and doing well. I'd rather pay myself interest than the bank. It just made more sense to me. I bought most of my cars this way, by taking a loan from my 401K and paying myself 6 percent interest.

 

[trevn]

Also on the Dave Ramsey topic....

There are definitely some good practices that he teaches, but it mostly comes down to finding a way to reduce frivolous spending and pay down debt. Some people need that kind of structure to help them with discipline and others do not. I see all kinds of people in my line of business. Some make lots of money and have nothing to show for it and others make not a lot and are set up quite nicely. You have to find what works for you.

 

[Cyinthenorth]

Credit union I work for has a matching funds policy. If you have enough liquidity to counteract a bad check, we make it readily available same day of deposit. If not, at minimum a 2-day hold. I would say 2-day is most common, but certainly have seen as long as a 10-day hold for people whose accounts are super sketchy and then bring in large checks. A supervisor can make a portion of it available right away at their discretion. This is done to protect people, but so many don't see it that way sadly. If you cash a bad check, the liability to repay any portion you've already spent is on YOU, not the remitter of the check.

 

[Bipolarcy]

I'm pretty sure Dave Ramsey would be okay with you withdrawing from your 401k once retired.

I was doing way before I retired. I probably took at least 3 loans from my 401K

 

[1100011CS]

A hold is normal for a large check due to fraud. I'd ask the bank what their Reg CC policy is for delaying funds availability. Typically it's a max of 2 days for on us checks and 7 business days for other checks. If they want to hold it longer they would have to prove to you why they are doing that and why the longer time frame is "reasonable" per the regulation.

As others have suggested, I would just call and talk to a manager of some sort. I work at a bank and here I would release funds if the customer was in good standing with us, had a reasonable account balance with us, and the check they deposited appeared to come from a reliable source with a reasonable back story. The other solution would be get it wired or ACHd next time

Not sure I'd be considered in 'good standing'. We use this local bank basically just for this kinda thing. I use almost exclusive online banking and our locals suck for that. So I keep a small balance in the local and just deposit large checks there and transfer to my online bank. This is the first time they've held one so long.

THanks for all the info.