Typically, check payments take some time to become accessible for use, which is determined by various factors behind the scenes.
- A check typically takes two to five business days to clear, depending on the type of check deposited
- Federal law sets rules for check clearing, but banks have their own criteria to verify details before customers can access the money
- Personal checks take longer to clear than cashier’s checks, certified checks, or checks issued by the government or the same financial institution
- Factors that affect the check clearing process include the type of check, the amount, account standing, and the customer’s relationship with the bank
- Tips for managing check clearing include monitoring the type, amount, and date of the check deposited, and considering using electronic methods such as direct deposit or P2P services
How long does it take for a check to clear?
When a check clears, it doesn’t always indicate that the money will be put right away into the payee’s bank or savings account. Generally, financial institutions clear checks in two to five business days; although, this can vary based on the type of check deposited. Holidays and weekends may extend the time for a check to clear.
There are some checks which are designed to clear quickly in comparison to a customary check that becomes available to access the following business day. These checks include:
- Checks issued by the government
- Certified checks
- Cashier’s checks
- Checks from the same financial institution
You can set alerts in form of email, text, or mobile notifications through bank channels to know when the funds are available for use.
Factors that affect check clearing
Checks and their holding periods are subject to regulations at financial institutions. A bank often holds a check to make sure the money is accessible for transfer and the check doesn’t bounce. The length of a check’s hold depends on the type of check, the amount, account standing, and the customer’s relationship with the bank.
Personal checks typically take longer to clear than cashiers, certified, or money orders because they are more prone to bounce. Since a cashier’s check is guaranteed by the issuing bank’s funds, it is less likely to bounce, but the bank can still place a hold on it if it is for a sizable sum of money.
Financial institutions are required by federal law to make the first $225 of a greater deposit available the next working day, and the remainder the day after that. This implies that if you deposit a check on a Monday, you may anticipate receiving $225 of the money on Tuesday and the remaining funds on Wednesday. Ask your bank about the status of your deposited check if it takes more than five days.
Let’s look at some of the factors that might cause a check to take longer to pass.
- A new bank account: The bank may retain any checks deposited automatically if the checking or savings account is created recently. Once the first check clears successfully, the bank may raise the deposit limit. Once the first check clears successfully, the bank may raise the deposit limit.
- History of multiple overdrafts: If the account has a history of overdrafts or bounced checks, then the bank may take a longer time to clear a check.
- Check amount: As per Regulation CC (the rules that U.S. banks must follow when processing checks), banks can hold checks above $5,525 for a longer duration to ensure fund availability and rule out fraudulent activities.
- International check or an unfamiliar payer: If a check is deposited from a particular payer or if it is from a foreign bank account, then the bank may take a longer time to verify the source account and fund availability.
- ATM deposits: If the check is deposited through an ATM or mobile application, the bank can hold it for verification. This can take even longer if the bank does not own the ATM at which the check is deposited.
Tips for managing check clearing
One can keep in mind the below tips to help manage check clearing:
- Monitor the type, amount, and date of the check deposited; holidays and weekends may increase the time it takes for funds to be available in the payee’s account.
- Another option is to consider asking the payer to use electronic methods such as direct deposit, wire transfer, or P2P services (through Venmo, Zelle, Paypal, etc.) for payments because these alternatives are generally faster, inexpensive, and completely digital—unlike checks.
- Be sure to read the deposit agreement and check the clearing norms set by your institution.
The check, if deposited in person at a bank or credit union branch, usually offers access to funds quickly. This must be done before the bank’s cut-off time to avoid further delay. The check deposits made through mobile applications and ATMs should be completed before the threshold time set by banks for quick access to funds.
Importance of Understanding The Check Clearing Process to Avoid Potential Extra Fees
The financial institution needs to acquire the money from the payer’s account to process a check. If the account is held with a different financial institution, the check is sent to a clearing house for the processing, which can take a few days. It is advised to deposit the check at the beginning of the week or before scheduled holidays to avoid further delay.
Additionally, the bank account disclosures and deposit agreements should be carefully reviewed before depositing a check to avoid any fees and get access to funds. It is also beneficial to check with the bank for any potential charges in case of an international check.
Generally, a check gets cleared within one or two business days. The bank may hold a check for longer in some scenarios, such as a large deposit amount, a history of multiple overdrafts, or an international check.
Please carefully review the bank account documentation and norms to understand the check hold and clearing conditions. The check must clear before the funds are utilized to avoid any fees.