One of the most important pieces a banking relationship is funds availability. I know it may sound pretty basic, but there are many, many people out there that don’t understand funds availability. Funds availability impacts everyone with a banking relationship. Funds availability is when you can use the money that you deposit. Funds availability can greatly differ from bank to bank, so I encourage you to check with your bank to find out what their policy is. I’m going to give you a few examples of how it can work.
-A cash deposit is made into a checking account. The funds are available immediately, and can be withdrawn, checks can be written, and the debit card may be used.
-A deposit is made with a check from another bank. The bank is local, so the money will be available to use the next day.
-A deposit is made with a check from a non-local bank. The funds take a few days to clear.
–Large deposits may be subject to a Regulation CC Hold (Reg CC Hold). It can take up to 7 days to clear.
–Electronic payments and direct deposits normally act as cash deposits.
–Money orders and official checks/cashier’s checks are NOT the same as cash and will be treated as a check.
-Some banks have what they call “cutover” during the day, say at 3PM. Any deposits made after 3 PM will be credited on the next business day.
One of the most prevalent reasons people go overdrawn is due to not understanding their bank’s funds availability policy. At my bank, if you make a deposit and the same day write a check that exceeds your “available balance”, you’ll get an overdraft fee. Being aware of the policy can save you money and trouble in the long run.
What is your bank’s funds availability policy?