Answers about Funds Availability

Can the bank place a hold on a payroll check?

Yes. When funds become available for withdrawal primarily depends on the type of deposit. While all banks are subject to the same maximum hold periods established by law, each bank may make deposits available sooner.

A bank can make the deposit available immediately or delay availability up to the maximum amount of time prescribed by law.

If your payroll check is a direct deposit, then the bank generally is required to make funds received for deposit in an account by an electronic payment available for withdrawal not later than the business day after the banking day on which the bank received the electronic payment.

This is required by Automated Clearing House (ACH) rules established by the National Automated Clearinghouse Association (NACHA) – the Electronic Payments Association or a Federal Reserve Bank which provides this service.

This happens when the bank has received both:

  1. Payment in actually and finally collected funds; and
  2. Information on the account and amount to be credited

A bank receives an electronic payment only to the extent that it has received payment in actually and finally collected funds.

Funds are considered “collected” when the bank has received payment for a check or other instrument.

July 2017