Opened bank account 10 yrs ago in CA. Have lived in Washington 7 years. Bank places hold on checks deposited from WA account, states it is out of state check. Hold causes overdrafts. Bank will not reverse overdraft fees even though check is good. This doesn't seem right or legal. Is it?
Estate Planning Attorney
Right? No. Legal? Yes. Banks have flexibility under the banking regulations to write internal policies. They cannot go over federal maximus. Some banks are more consumer friendly than others. This problem would be resolved if your WA account and your CA account were with the same bank.
According to Reg CC rules:
Delaying funds availability
For certain types of deposits, Regulation CC permits financial institutions to delay, for "a reasonable period of time," the availability of the funds. The Fed generally defines "reasonable" as one additional business day for on-us checks, five additional business days (total of seven) for local checks and six additional business days (total of 11) for nonlocal checks. Institutions may impose longer holds in exceptional cases.
Deposits of cash and electronic payments are not eligible for exception holds.
Here are the six types of deposits that are eligible:
Large deposits (greater than $5,000) -- Any amount greater than $5,000 may be held. Banks must make the first $5,000 of the deposit available for withdrawal according to the bank's availability policy and the remainder within the "reasonable" time frames.
Redeposited checks -- May be held unless the check was returned because an endorsement was missing or because the check was postdated. If the deficiency is corrected, the check may not be held as a redeposited check.
Deposits to accounts that are repeatedly overdrawn -- An account may be considered repeatedly overdrawn and items may be held if:
1. On six or more banking days during the previous six months the account had a negative balance, or would have had a negative balance had checks and charges been paid, or
2. On two or more banking days during the previous six months the account balance was negative in the amount of $5,000 or more, or would have been had checks and charges been paid.
Reasonable cause to doubt the collectibility of a check -- Doubtful collectibility may exist for postdated checks, checks dated more than six months earlier and checks that the paying institution has said it will not honor.
Checks deposited during emergency conditions that are beyond the control of your bank -- Such checks may be held until conditions permit the bank to provide availability of the funds. Examples of emergency conditions are natural disasters, communications malfunctions and other situations that prevent the institution from processing checks as it normally does.
Deposits into accounts of new customers (open for less than 30 days) -- Next-day availability applies only to cash, electronic payments and the first $5,000 of any other next-day items; the remaining amount from next-day items must be available by the ninth business day.
A check is considered "local" if your institution is located in the same check-processing region as the paying institution. Funds from local checks must be made available by the second business day following the day of deposit.
A check is considered "nonlocal" if your institution is not located in the same check-processing region as the paying institution. Funds from nonlocal checks must be made available by the fifth business day following the deposit. A check-processing region is generally the geographical area served by the 12 Federal Reserve banks.
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