How Long Does It Take for a Check to Clear?
As more people adopt electronic banking and banking by phone, check use is becoming less frequent. But there are still people who are still compelled to use paper to conduct their banking transactions. So, how long does it take a check to clear? Maybe you’re a landlord with a tenant who writes out a check for the rent each month. Or perhaps your Grandma still sends you a check for your birthday every year. Whatever the reason, it pays to understand at what point you get access to the funds you deposit by check. You likely will not have access to the full amount right away when you deposit it into your bank account. This might be the case, even if your bank balance indicates the money is there in your account already.
If you try to use the funds right away, you may run into problems. You could bounce payments and get charged overdraft fees by your bank. So it pays to understand the basics of cashing checks and the difference between clear vs hold times. Read on to find out more about how long it takes for checks to clear and how you can avoid costly fees that may result from any misunderstandings.
How Long for a Check to Clear
- Financial institutions always outline their hold policies when you open up a bank account.
- Most checks take two business days to clear.
- Checks may take longer to clear based on the amount of the check, your relationship with the bank, or if it’s not a regular deposit.
- A receipt from the teller or ATM tells you when the funds become available.
How Long Does it Take for a Check to Clear? Well, it Depends…
General rules
There is a difference between how long it takes for a check to clear and how quickly a bank must make funds available. There are laws and regulations that govern when certain deposits in your bank account need to be made available. For example, checks from the federal, state, or local government must be available for withdrawal on the business day following the business day the person deposited the check. Additionally, the first $200 of a check from the federal government must also be available on the business day the person deposited a check.
Bank policies
The bank itself is the next factor to consider in how long does it take for a check to clear. Each financial institution has its own policy governing deposits. Of course, that includes the typical time it takes for check deposits to clear and/or be made available for use. Ideally, banks would like to ensure that the funds are available in the payer’s account first before releasing them to the payee. It’s a good idea to understand your bank’s funds availability policy. You can usually check online as many banks make their policies available on their websites.
Chase, for example, says in their online Deposit Agreement, “Generally, for checking and savings accounts, you may withdraw funds the next business day after the business day you deposit them.” They also note, however, that they can refuse a deposit at any time. “As a general rule, your bank or credit union will probably make a portion of the funds (usually $100 to $300) available to you immediately upon deposit with the balance available the next business day,” Jack Vonder Heide, president of Technology Briefing Center, a firm that advises banks and credit unions on issues relating to technology including check processing, advised. (Source: Jack Vonder Heide)
Method of Deposit
How you deposit your check could also have an effect on when you have access to funds. For example, whether you use mobile deposit or in person. Usually, the quickest way is to deposit the check in person early in the day. Some ATM deposits are not posted until after the bank’s cutoff time. Mobile check deposits can also be subject to limits, such as allowing only a certain amount deposited within a specific period of time.
Why a bank holds funds
A bank can hold checks for a variety of reasons. This includes if there are insufficient funds in the payer’s account balance or if it’s a new account with little history. But how long can a bank hold a check by law? It varies based on many factors, including the issuer of the check and the type of check.
“If the check is large (usually over $5,000) or if you have a history of being overdrawn, the bank or credit union will probably delay funds availability for up to a week,” Vonder Heide adds. An international check can also delay the release of funds, he said. Also, it matters if a bank reconciles debits or credits first in the morning, as reconciling debits before adding in funds from checks (or other credits) could cause an overdraft if not enough funds are available. (Source: Jack Vonder Heide)
General Hold Times
When you open up a bank account, financial institutions always disclose their policies about deposits. This disclosure includes hold times for check deposits. Banks place these holds on checks in order to ensure the funds are available in the payer’s account before giving you access to the cash. By doing this, they help you avoid incurring any charges—especially if you use the funds right away and the check bounces.
It usually takes about two business days for a deposited check to clear. But, it can take a little longer—about five business days—for the bank to receive the funds. How long it takes a check to clear also depends on the amount of the check. Additional factors include your relationship with the bank, and the standing of the payer’s account. If you can, wait a few days before contacting your bank about holds on deposited checks. Of course, the hold time often depends on the nature of the check. A bank may choose to hold a check longer if
Reasons Banks Hold Checks
- Unusual or Suspicious Deposit
- Unknown Source – if you’ve never deposited a check from that payer before. The payer has a lot to do with hold times. If you’ve never deposited a check from that person before—and it’s a sizable amount—your banking institution may choose to hold it until it clears.
- Large Amount – if the check is for a large amount, over $1,000.00
- International Bank Draft – If the check is from an international bank. This requires a much longer hold time because it can’t be easily verified.
Hold times for these checks depend on your institution, so you should check with someone about the policies. Also, check hold policies vary between banks. You need to check with your institution about how long you have to wait to access the funds deposited from another bank.
Additional Reasons Why Banks Hold Checks
There are additional reasons banks hold checks. Your bank may hold a deposited check if there are:
- Insufficient Funds – in the payer’s account or if the payer’s account is closed or blocked for some reason. Banks usually resend checks with issues to the paying institution, but this results in a longer delay for the depositor.
- New Account – Some banks also issue holds for deposits on new accounts. Accounts that have no or little history may automatically qualify for holds on all check deposits until the time that the bank feels you have solidified your relationship with it.
- Negative History – Accounts that frequently bounce payments or go into overdraft—may also have checks held.
- ATM and Mobile Banking Apps – Certain institutions may hold checks that are deposited through mobile banking apps or through the automated teller machine (ATM). These deposits have to be verified and cross-checked before the bank can release the funds. It’s always a good idea to check with the bank about its policy when it comes to hold times for these types of deposits.
Keep Your Deposit Receipt
When you deposit a check, you typically get a receipt that usually says when the funds will be available. This happens whether at an ATM, a teller’s counter inside the bank, or a drive-through window. You should always keep the receipt handy until the check clears. The funds-availability date on the receipt lets you know when it may be time to contact the bank regarding hold inquiries.
Funds Availability
Depending on the amount of the check, you may have access to the full amount in two days. However, this doesn’t mean that the check has actually cleared. Some banks make a portion of the check available immediately or within one business day. For example, your bank might make $150 or $200 of a $500 check available immediately, or within one business day of the deposit, and make the balance of the check available in two days. The bank may be likely to clear checks right away if you have a consistent history with a certain payer. There are other times when the bank will override the hold for you.
- Emergencies – In cases of emergency, explain your needs and ask the bank’s understanding and assistance.
- The hold is excessive – if the hold has been on too long, you can ask that the funds be released.
- Good Customer – if you’re a really good customer, or if the bank decides to verify the check at the time of the deposit.
- Established Routine – Say, you’re a freelancer and receive checks every other month for work you do for that company. The bank may hold the initial check to make sure it clears. If you let them know you are expecting similar checks from the same company on a regular basis, the bank may release the funds to you for subsequent deposits after a pattern is established.
The above issues generally require a trip to your branch. Although it will cost you some time, it may be worth it if you need the funds right away or if it’s a large check that just can’t wait.
There’s a Difference Between Current Balance vs. Available Balance
Most banks will credit your deposit the same day to your actual balance, which indicates your total account balance. However, a deposit receipt doesn’t necessarily mean you have free, immediate access to that money. Those funds will not be available until the bank actually clears that money. For example, if you get a check for $1,000, you might only have immediate access to $200. When the rest of the $800 is cleared, then your current balance and available balance will be the same.
Funds Availability vs How Long Does it Take for a Check to Clear
For all of their seeming simplicity, checks can get complicated — there are numerous ways they can be processed. Even if a check clears quickly through electronic processing that doesn’t necessarily mean the funds are immediately available. Regulation CC is a federal law that determines how long it takes for funds to be made available based on the type of transaction (cash, type of check, wire transfer, for example), and amount of the deposit. Sometimes these deposits are made sooner, but a bank has until the next business day to deposit at least a portion of the funds.
Banks will also hold checks to determine the legitimacy of the deposit, to thwart potential fraud and prevent potential losses from risky deposits. For a new account, the first $150-$200 of a check can be available the next day but the remainder can be put on hold for as long as nine business days. That’s nearly two weeks, and a long time to wait if you really need the money.
Available Funds Does NOT Mean the Check Cleared
By law, your bank makes a certain amount of funds available for withdrawal shortly after you deposit most checks. This availability doesn’t mean that the check is good or that your bank actually received funds from the issuing bank. Banks are required by law to make a portion of the check amount available to you soon after deposit. A check has not necessarily cleared just because the money is available in your account or appears on a receipt.
Unless there are clear signs of fraud or other problems, banks follow a funds availability policy, which details how soon you can use your money. In many cases, the first $200 from personal checks is available within one business day. Your bank may hold the remainder for several more days. It might be helpful to use two different categories to understand when you can spend money:
- Typical situations, when you have no reason to worry about a check that you deposited
- Suspicious circumstances, when you don’t know or don’t trust the check writer
How Long Does it Take for a Check to Bounce?
Checks typically take two to three business days to clear. Aside from the accessibility required by law, individual banks may make more funds available before checks actually clear. But, even after the funds are made available, the check could still bounce. In the case of fraud, you could be required to repay the funds 30 days or more after the funds “cleared” your account.
- It’s your problem: You are always responsible for deposits you make into your account. Even if your bank lets you walk away with cash or transfer money out, you might have to replace that money later if the deposited check bounces.
- Definition of clear: The term “clear” can be confusing, and bank employees may use the term loosely. To be safe, find out precisely when money transfers from the check writer’s bank to you your bank. If that happens successfully, there was enough money in the check writer’s account, and the check will not bounce.
- Your available balance: A check has not necessarily cleared just because the money is available in your account or appears on a receipt. Again, federal law requires your bank to make the funds available to you within a certain amount of time, whether the funds actually arrived from the other bank or not.
- A fraudulent check – It does not pay to accept and deposit a fraudulent check, like a stolen check from another person’s or company’s checking account. In this scenario, the check will clear, but you’ll be responsible for paying the money back once the bank and the account holder discover the check was stolen. This might be 30 days or more after the funds were made available to you by your bank.
Large Deposits – How Long Does it Take for a Check to Clear?
Large deposits typically come with a longer hold time. Some banks may hold checks that total $1,500 or higher for as many as 10 days. The number of days the bank holds these checks depends on your relationship with the institution. You’re more likely to get the money immediately—or within fewer than 10 days—if you have a healthy account balance and no history of overdrafts. A history of overdrafts and low account balances may mean you’ll have to wait the full 10 days to receive the money.
Business Day Cutoff Times
It is important to know what a bank considers to be the cut-off time for a business day. If you deposit a check after that time, it won’t begin processing until the next business day. This could delay your access to those funds. The cut-off times can vary based on whether you deposit the check with a branch teller or at an ATM.
- By Law, 2 p.m. at a Bank Branch – Legally, the cut-off deposit time cannot be earlier than 2 p.m. at a branch or noon at an ATM.
- In General, 5 p.m. at a Bank Branch– For most banks, the cut-off time is around 5 p.m. at a branch location For ATMs, it is usually later — around 8 p.m. or even later.
- For mobile check deposits, the cut-off time is similar to that of ATM check deposits. (Source: mybanktracker.com)
How Long Does it Take for a Check to Clear – Bottom Line
To process a check, your bank or credit union needs to acquire the money from the payer’s checking account. If the account is at another financial institution, the check is typically sent to a clearinghouse that handles the request. The time it takes for a check to clear depends on the check itself and the status of the bank account. But it’s usually a matter of days, not minutes.
Direct deposits, wire transfers and P2P transfers are generally faster. Consider asking the payer for direct deposit or to wire the funds if you’re expecting a large amount. You could also ask the payer to send you money using a mobile peer-to-peer payment app. Transactions are inexpensive and fast — and unlike checks, there’s no delay or need to ask: How long does it take for a check to clear?
