It’s frustrating to attempt to withdraw funds from a savings account, only to be told by a teller that you can’t access your balance – particularly if you need the cash immediately and have no other options. In general, banks are under no obligation to inform you when they place a hold on your savings account, but knowing why your bank has taken this type of action can possibly help you avoid it in the future.
There are several reasons your bank may put a hold on your savings account, such as an aging hold, a history of depositing checks with non-sufficient funds and human error.
Understanding the History
The banking industry once put holds on all funds deposited into checking and savings accounts until Regulation CC was enacted. Among the changes that resulted from this regulation were that banks continued to require holds on accounts with third-party payment powers – like checking accounts – but savings deposits and certificates of deposits became officially exempt from the hold requirement. Your inability to withdraw funds is likely to be found closer to home.
Reviewing State Law
If your bank put a hold on your savings account, the institution may be complying with state law that supersedes Regulation CC. Language explaining your state’s hold law is contained within the contract you sign when you open the savings account. Avoid the embarrassment of having a transaction rejected by asking a staffer whether your state places hold laws on savings accounts.
Look at Your Bank's Policy
Some banks automatically place holds on savings accounts as a matter of policy. A bank's board of directors may adopt a hold policy to indemnify the institution against loss that covers both local and non-local deposits. The policy can also stipulate a specific number of hold days. Additionally, banks frequently adopt policies relating to red-flagged accounts: if you have a history of depositing checks returned for non-sufficient funds, for example, that may be the reason your funds are held.
Check Bank Hours
Look for signs posted in the lobby of your bank, at the drive-up facility or near your bank’s ATMs to learn your bank’s cut-off deposit time. If your withdrawal slip is rejected when you try to get cash, the funds you are attempting to withdraw may not have been processed and credited to your savings account yet.
Learn About the Aging Hold
Banks give themselves an extended time period to collect funds on new savings accounts, resulting in a longer-than-average hold period. This is called an "aging hold," and it may be the only time your bank is legally allowed to hold your funds. Check the date on which you opened your savings account to see if aging is the reason you can't tap your funds. It could take up to 30 days to clear a first deposit.
Know the Legalities
Courts are required to notify litigants of actions to freeze accounts, garnish wages and otherwise hold funds pending the outcome of a legal action. If you are engaged in a civil or criminal lawsuit in which one or more of your accounts are frozen, you won’t know about this if the courts have no way to contact you. Joint accounts are commonly frozen during divorce actions.
Check for Mistakes
Do banks make mistakes? Not often, but a mistaken hold can be placed on your savings if your bank offers both types of accounts and an employee accidentally processes the transaction using a checking, rather than savings, account code. If you have been denied access to funds and know that your bank has no reason to hold your money, you may have fallen victim to a computer glitch or human error.
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