Many people overdraw their accounts because they don’t know when the funds they deposited will be available to use. When will money you deposited be available?
It depends on a couple of things. In general it depends on:
- Where you bank. Different types of institutions are under different sets of rules. This article covers general rules for FDIC regulated banks.
- How you bank? Do you prefer to deal with people or make all of your deposits electronically or by mail?
- The location and type of paying bank.
- Whether you have repeatedly overdrawn your account(s).
Cash deposits: If you hand your cash over to the bank employee, your money should be available for withdrawal the next business day following the day on which you made your cash deposit. If you don’t make the deposit to an employee of the bank, but drop it in the slot outside the bank, your funds should be available the second business day following the day you make your deposit.
Electronic payments: In general a bank is required to make your funds available for withdrawal not later than the business day after the banking day on which the bank received the electronic payment. When does the bank ‘receive’ the payment? A bank receives an electronic payment only when the bank has collected the funds from the paying party, and has the information about the amount to be credited to your account.
Checks: This depends on who is paying you, and where that person’s/entity’s bank is located.
- In general if a check is drawn against the US government, and you (the payee) deposit it into your account it should be available the next business day, assuming you endorse it correctly.
- A check payable by a state or local government, should also be available the next business day, if you live in the same state, and you deposit it into your account.
- Cashier checks - If you don’t deposit a cashier check in person, a bank is not required to make the funds available for withdrawal until the second business day after the banking day on which the funds were deposited.
- Non-local checks – Funds should be available for withdrawal not later than the fifth business day following the banking day on which funds are deposited.
ATM deposits: If you deposit cash or check in an ATM that is affiliated with your bank, or in the same banking group, your funds should be available the next business day. However if you deposit cash or a check in an account at a nonproprietary ATM it could take up to five business days following the day the funds are deposited.
Keep in mind these are general rules that apply to Federally regulated banks. Credit unions, state banks and specialty houses like brokers are subject to different rules and regulations. Ask the bank where you have your accounts to furnish you with a set of rules so you will know what to expect.
And of course there is an exception to the general rules. The rules go out the window if you repeatedly overdraw your accounts. Your accounts are ‘repeatedly overdrawn’ if:
- On six or more banking days within the preceding six months, your account balance was negative, or the account balance would have become negative if checks or other charges to the account had been paid; or
- On two or more banking days within the preceding six months, your account balance was negative, or the account balance would have become negative, in the amount of $5,000 or more, if checks or other charges to the account had been paid.
- The bank has reasonable cause to doubt the collectibility of a check deposited in your account.
Remember banks can make funds available sooner. Most don’t, but some do, depending upon the policy each bank has about customer service. Some reward long time customers, business customers, or customers which maintain large accounts by being more flexible about overdrafts. Banking policy is controlled by the management of each bank. It is always best to be conservative and expect the bank will hold onto your money as long as it can.
Do you have a gripe with the way your deposits are handled? Share your comments below