Banks enable customers to make deposits in a variety of different ways. The type of deposit, the time of the deposit and the account history all affect the length of time that it takes for deposited funds to become available for use. Traditionally, most bank deposits involve checks and cash, but increasingly, large volumes of deposits are in electronic form.
In 1910, the American Bankers Association developed a system for tracking the geographical origin of checks. The system's nine-digit routing numbers are printed on the bottom left-hand corner of checks. Every bank in the U.S. receives a routing number. The number enables banks to collect funds on deposited checks more quickly. In 2003, the Check Clearing for the 21st Century Act enabled banks to convert checks into electronic form. The change dramatically reduced clearing times for many checks.
Most companies in the U.S. use direct-deposit services to pay employees. The U.S. Treasury encourages Social Security recipients to sign up for direct deposit, and some states pay unemployment benefits only through direct deposit. Banks accept in-person deposits of checks and cash at teller lines on pre-printed or generic deposit slips. Many banks' automated teller machines (ATM) are equipped to accept deposits. Internet banking transfers are popular with people transferring funds within one institution.
Direct deposits, online transfers and cash deposits are available for immediate use when deposits occur between Monday and Friday before the daily bank cut-off time. ATM deposits are normally available the next day. Banks make the first £65 of a check deposit available the next business day, but hold remaining balances that do not exceed £3,185 for two business days. Any remaining balance on a large check is held for seven business days.
Cashier's checks, Treasury checks, instate government checks and U.S. postal money orders are available the next business day if written for less than £3,250. Balances in excess of £3,250 are held seven days. Deposits to accounts less than 30 days old are held for up to nine business days.
Many people confuse available balances with posted balances. When electronic transactions occur, vendors place hold amounts on current accounts. The transactions actually post after midnight along with checks and other types of transactions. Some vendors place a 60p hold on an account even though the actual transaction was for more, and this leads some people to misjudge how much money they have left in their accounts. Most banks show cash deposits made after the end-of-day cut-off as being available, but in reality they do not post until after the midnight on the next business day.
Federal Regulation CC requires banks to release holds on check deposits in accordance with the expedited funds availability matrix (see Resources). Although funds are available for use when the hold expires, the drawee bank may not have cleared the check yet. Misdirected checks often take weeks to clear, and some checks bounce long after the check hold expires. Many bankers do not place holds on checks for established customers, but if the check bounces, the client will have to return the money received.