Banks and Deposits

There’s a site called “Complaints Board” where I found a complaint that reminded me of a personal experience. He had a problem with a hold being placed on a deposit.

I went to deposit my paycheck on friday @ noon. They said I could only have access to $100 until tomorrow. This irritated me but I let it go. The next the day the money wasn’t there so I called them. They said that due to my lack of deposits with them, they were going to hold my paycheck for 5 days. I am a new customer with them. I told them I needed the money because I had 3 young children and need to buy food. They didn’t care. I could see their point if it was a personal check, but it was my paycheck, from a local business. What I support my family on. I told them that I would be canceling my acct as soon as I can get my direct deposit that I had just set up change over to a different bank. I also told them I would tell everyone I know and tell the public in every way possible not to use their bank and if they were, to cancel. The associate I spoke to refused to let me speak to a supervisor. They said in their huge booklet they sent me with it states in their they could hold anyone’s money at their discretion. Don’t ever use this bank. They are heartless, money grubbing, useless people that waste the oxygen that God gave them.

Here’s my response to that:

They cannot hold anyone’s money at their discretion. Federal banking law provides that funds that have cleared *must* be made available to the account holder.

That does mean, though, that they can refuse you the courtesy of providing the funds drawn on any third party’s account *until* they have cleared. But they cannot impose an arbitrary hold time, such as “two weeks” or “ten business days”. Once you confirm that the issuing bank has released the funds, the law says you must have access to them.

It does seem that banks do often use the ignorance of their customers regarding this aspect of banking law. This obviously favors the bank, since they earn interest on the money that they do not let you use for the period of their arbitrary “hold” on a deposit.

I once was refused access to funds one day, the money primarily being in the form of a recent deposit. The next morning, I checked with the issuing bank and confirmed that they had released the funds. I went back to my bank and requested the same value cashier’s check as I had the day before.

“It is bank policy that deposits be held for ten days,” the clerk told me dismissively.

“It is federal law that you must release the funds on a draft that has cleared, and the draft in question has cleared. So which are we going to follow, bank policy or federal law?”

I got my check.