Purpose
The purpose of Regulation CC is to standardize and limit the hold periods placed on checks deposited to transaction accounts, and to ensure the adequate disclosure of funds availability policies to customers.
Summary/Requirements
Next-Day Availability
Deposits of the following items to a transaction account must be made available for withdrawal no later than the first business day following the day of deposit:
- Cash
- Electronic payments
- “On-us” checks
- United States Treasury checks deposited to the payee’s account
- The following items if deposited in person to the payee’s account:
- United States Postal Service money orders
- Federal Reserve Bank or Federal Home Loan Bank checks
- State or local government checks
- Cashier’s, certified, and teller’s checks
$100 Rule. In addition, the first $100 (or the entire amount if the deposit does not exceed $100) from a deposit of local or non-local checks must be available for cash or other withdrawal no later than the day after deposit.
$400 Rule. On the day that funds become available for withdrawal, a bank may limit to $400 the amount of cash that the customer may withdraw. (This is in addition to the $100 already made available by the $100 rule.)
Second-Day Availability
Deposits of the following items to a transaction account must be made available for withdrawal no later than the second business day after the day of deposit:
Local checks
Treasury checks, Postal Service money orders, checks drawn on a Federal Reserve Bank or Federal Home Loan Bank, state or local government checks, and cashier’s, certified, and teller’s checks not subject to next-day availability.
$400 Rule. On the day that funds become available for withdrawal, a bank may limit to $400 the amount of cash that the customer may withdraw. (This is in addition to the $100 already made available by the $100 rule.)
Fifth-Day Availability
Deposits of the following items to a transaction account must be made available for withdrawal no later than the fifth business day after the day of deposit:
Non-local checks
$400 Rule. On the day that funds become available for withdrawal, a bank may limit to $400 the amount of cash that the customer may withdraw. (This is in addition to the $100 already made available by the $100 rule.)
Case-by-Case Holds
If an institution normally makes funds available sooner than required, it may place holds up to the statutory limit on a case-by-case basis. To be able to place case-by-case holds, the institution must:
Provide notice to the customer when a case-by-case hold is invoked, and
Include in its funds availability disclosure an explanation that the hold period may be extended on a case-by-case basis.
Exception Holds
In certain instances (called “exceptions”), a bank may place “reasonable” extended holds beyond the statutory limits. “Reasonable” is defined as up to an additional 5 days for local checks and an additional 6 days for non-local checks. An exception-based hold can be placed for any of the following reasons:
· Large deposits - when the amount of local and non-local check deposits exceeds $5,000 on any single day, the amount over $5,000 may be held for an extended period.
· Checks redeposited due to insufficient funds
· Repeated overdrafts - if a customer has been overdrawn on an account on any 6 banking days within the last 6 months, OR overdrawn by $5,000 or more on any 2 banking days in the last 6 months. (The branch may use this exception for 6 months after the last overdraft that made the depositor a “repeated overdrafter”)
· Reasonable cause to doubt collection ability - if a financial institution has reason to believe the check being deposited will not be honored by the paying bank
· In emergency situations (severe weather, computer malfunctions, etc.)
The $100 rule does not apply when an exception-based hold is placed, unless the reason for the hold is a large deposit of over $5,000.
Whenever an extended hold is placed, the financial institution must notify the customer, in writing, of the hold and the reason for the hold.
Special Rules for New Accounts
Regulation CC includes special rules for new accounts (i.e., transaction accounts open less than 30 days).
These rules include:
Cash and electronic deposits are subject to next-day availability.
Only the first $5,000 of a day’s total deposits of cashier’s, certified, teller’s, traveler’s, and government checks is subject to next-day availability. The amount over $5,000 must be made available no later than the ninth business day after the day of deposit.
The $100 rule does not apply.
All other check deposits (including deposits of on-us checks) can be made available at the discretion of the financial institution.