A customer who deposits in his bank account a check or other item drawn on another bank usually must wait before being able to draw against the deposited item. Such a waiting period consists of the estimated time it takes for the check to pass from the depositary bank to the payor bank and then be returned to the depositary bank if the check is dishonored or returned unpaid by the payor bank for any reason.

Do Banks have Schedules of When Funds Should be Available in an Account?

Banks ordinarily set up schedules that estimate the time it takes for a check to travel to the payor bank and back to the depositary bank, if the check is returned unpaid. These schedules are based on the location of the payor bank in relation to the depositary bank. Waiting periods are considered necessary to guard against the risk that the depositing customer will draw against uncollected funds.

How Quickly are Banks Required to Have my Funds Available after Deposit of Non-standard Checks?

Next-business-day availability is required for deposits of cash, wire transfers, certain federal, state, and local government checks, the first $100 of the total of all checks of one customer deposited on any one business day, most checks deposited in a branch and drawn on the same or another branch of the same depositary institution, and such items as cashier’s checks, certified checks, and teller’s checks.

How Quickly are Banks Required to Have my Funds Available after Deposit of a Standard Check?

Via the Federal Expedited Funds Availability Act, the following rules apply: 

  • Two business days after deposit for all local checks
  • Five business days after deposit for all non-local checks
  • A one-day extension of time limits applies to a check deposited in an account in Alaska, Hawaii, Puerto Rico, or the Virgin Islands and drawn on a depository institution in any other state, commonwealth, or territory
  • Special availability periods are set for deposits at a nonproprietary automated teller machine
  • Longer periods of availability are permitted for:
    – New accounts of more than $5,000
    – Any checks exceeding $5,000
    – Checks redeposited after they have been returned unpaid
    – Any deposit account that has been overdrawn repeatedly
    – Any emergency condition for prevention of fraud losses

May a Party Sue a Bank for Undue Delay?

Civil liability may be imposed on non-complying depositary institutions, and class actions are also permitted. Both Federal district courts and other courts of competent jurisdiction have concurrent jurisdiction to hear these cases. A one-year limitation period is prescribed for any action seeking to impose civil liability on a depository institution.

A bank is not civilly liable for true error. Liability in these cases will not exceed the amount of the check giving rise to the loss or liability, and, where there is bad faith, other damages, if any, suffered as a proximate consequence of any act or omission giving rise to the loss or liability.