How long can a bank hold a check deposit, and what a company account changes about the answer

Somebody asked me on a call how long her bank could sit on a check for thirty eight thousand dollars. Two business days, I told her. Anything past that is a violation, I said, and she wrote it down and took it away with her, which I have thought about more than is reasonable in the weeks since, because she was going to repeat it to a bookkeeper who would repeat it to somebody at the bank. I was wrong on both counts, and this page is the correction I owe her, which is an embarrassing thing to publish and worse to leave unpublished.

Two business days is a real number. I had assumed it covered the whole check. Section 229.12(b) of Regulation CC says exactly that for a local check. What I had lost track of is where the schedule stops. Section 229.13(b) lifts the aggregate above $6,725 on any one banking day clean out of it. So $6,725 of her deposit sat on a federal clock. The other $31,275 sat on nothing at all. How long can a bank hold a check deposit turns out to be a question about which slice of it you mean.

What I should have told her to do first

Go and find the funds availability disclosure your bank handed you when the account opened. It is usually three or four paragraphs. It says next business day somewhere near the top. Almost nobody reads the thing twice. I did not read mine for two years, and when I finally did I found a sentence reserving the right to delay availability on deposits above a figure the bank had left at the old $5,525 line. For a company account that document is not marketing. I think it is very likely the notice section 229.13(g)(2) owes you, already delivered, months before the hold you are angry about.

I did not understand that until I read section 229.13(g) properly. It is why this runs to 2,700 words instead of a one line correction.

The paragraph that exists only for company accounts

Start with the ordinary rule. Under section 229.13(g)(1) a bank that extends availability owes you a written notice. That notice has to carry a code identifying the account, the date of the deposit, the amount being delayed, the reason the exception was invoked, and the date the funds come free. Suppose the bank works the facts out only after you deposited. It still owes you the notice, no later than the first business day after it knows.

Now the carve-out, which I find genuinely annoying. It applies to what the regulation calls a nonconsumer account, which is your LLC. For the large deposit exception and the redeposited check exception, the bank may give a single notice instead. It states why the exception may be invoked, and the period within which deposits will generally be available. One condition rides along with it. The single notice is allowed only if each exception it cites gets invoked for most check deposits in that account.

My guess is that this condition gets ignored more often than any other line in part 229, and it is a guess with nothing behind it except how the disclosures I have read are written. Picture the ordinary case at a big bank. A bank hands every business customer the same blanket paragraph at account opening, invokes the large deposit exception twice a year on the two occasions somebody deposits a settlement cheque, and never sends anything else, which is a long way from an exception that will be invoked for most check deposits in the account. I cannot see how that sits inside the condition in section 229.13(g)(2). I have no idea whether a depositor has ever tested it, and part 229 gives no clue either way.

Coverage itself was never in doubt, and people get this wrong in the opposite direction constantly. Regulation CC does cover business accounts. Section 229.2(a)(1) defines an account by what it does, a deposit that is a transaction account, meaning an account you pay third parties from. Nothing turns on whether the holder is a person or a company. The company just gets warned once instead of every time.

Money you can ask for back

Here is the practical piece I would put above everything else on this page.

Section 229.13(e) lets a bank hold a check when it has reasonable cause to doubt collectibility, and that is the loosest exception in the regulation. It also has the sharpest edge pointed back at the bank. Under section 229.13(e)(2), if the bank invoked reasonable cause and did not give you written notice at the time of deposit, it may not charge you overdraft or returned check fees that happened only because of the delay, so long as the check was in fact paid. The bank can protect the fees by sending a notice about them and refunding on request.

So a payment that bounced because of an undisclosed hold on a check that later cleared is money you should be asking for. Not arguing about it for a month. Asking for, in writing, quoting section 229.13(e)(2). I have suggested this to three people. Two of them got the fee back.

The same section closes two shortcuts. Reasonable cause needs facts that would produce a well-grounded belief in a reasonable person. The belief cannot rest on the check being of a particular class. Nor on it being deposited by a particular class of persons. The reason has to appear in the notice. A hold explained to you as our policy for checks like this one is not, on the face of the regulation, an explanation at all.

A digression about rounding

This next part does not help anybody and I enjoyed it anyway. The dollar figures in Regulation CC are indexed under section 229.11, on 1 July 2020, on 1 July 2025, and every fifth 1 July after that, against the CPI-W. The adjustment is rounded to the nearest multiple of $25. When the rounding produces no change at all, the percentage does not vanish, it gets carried forward into the next five year window and accumulates until it finally moves a number. The measurement period behind the figures now in force ran from July 2018 to July 2023, which means the thresholds you are living with today were fixed by a price level recorded three years before they took effect, and they will not move again until 1 July 2030.

Which means the thresholds below are not really 2025 numbers. They are a running total of inflation since the last time it cleared $25.

The large deposit line moved from $5,525 to $6,725 on 1 July 2025. I carried the old figure for a year after it changed. Nobody corrected me on that either. A $1,200 move decides whether a five figure deposit is partly on schedule or almost wholly off it, so that was not a harmless slip either.

Turning an exception into a date

The regulation does not go silent once an exception applies. Section 229.13(h)(4) measures a reasonable extension: up to one business day for a check drawn on the same bank, five business days for checks on the local schedule, six for the nonlocal ones. Then comes the sentence that decides arguments. A longer extension may be reasonable, but the bank has the burden of so establishing.

I put a calendar under it. A local check deposited Thursday, with the excess over $6,725 held as a large deposit, carries a presumptive ceiling of seven business days. That is the number I now quote. No holiday, and the money lands on the Monday of the week after next. Eleven calendar days from a Thursday. Run the same deposit as a nonlocal check and the ceiling stretches to eleven business days, which is a Friday sixteen days out.

Section 229.13(b) has a second sentence I had never read closely. Where a customer holds several accounts at the same bank, the bank may apply the large deposit exception to the aggregate across all of them, and the regulation says this stands even where the customer is not the sole holder and the holders are not all the same. So splitting a big deposit between two company accounts at one bank buys you nothing at all. I read section 229.13(b) twice over. I did not believe it the first time.

The exceptions themselves

New accounts are the harshest and the easiest to plan around. An account counts as new for the first 30 calendar days, and during that window only the first $6,725 of the fast-availability checks stays on schedule, with anything above it held to the ninth business day. Section 229.13(a)(2) writes in the escape. The account is not new if each customer on it already held another account at that bank for at least 30 days, within the 30 days before opening. A second entity account at your existing bank is not a new account. The first one at a new bank is.

Redeposited checks fall out of the schedule under section 229.13(c). There are two ways back in. A check returned only for a missing indorsement qualifies. So does one returned only because it was postdated and now is not, provided the return reason printed on the check actually says so. I would read that reason off the check itself. The summary in your banking app is not the same document.

Repeated overdrafts catches founders with lumpy cash flow. I have watched it happen twice. Section 229.13(d) throws the account outside the schedule for six months after the last overdraft, and defines repeatedly without leaving much room at all. Six or more banking days negative in the preceding six months counts. So does a pair of days negative by $6,725 or worse. I think the second test is the cruel one, because it does not require you to have actually overdrawn anything: the regulation counts the days when the balance would have gone negative had the checks and charges been paid, so two declined debits in half a year are enough to cost you the schedule on every deposit for the next six months, at exactly the moment you can least afford to wait for money.

What the money actually does, hour by hour

A hold is not one wall. Regulation CC releases a deposit in slices, and the slices are worth knowing because they decide what you can do on which morning.

Section 229.10(c)(1)(vii) puts the lesser of $275 or your whole check deposit in your hands the next business day, whatever else is going on. The schedule proper follows, second business day for a local check, fifth for a nonlocal one. Cash handed to an employee of the bank is available the next business day, and cash deposited any other way takes two.

Electronic payments carry their own trap. Section 229.10(b)(1) gives the bank until the next business day after it received the payment, and then section 229.10(b)(2) defines received: the money in actually and finally collected funds, and the information on which account and what amount to credit. Both parts of that, not either one. A wire sitting unapplied because the remittance data is wrong is not a hold you can complain about. The regulation says it has not arrived.

Then the piece almost nobody quotes. On the day funds come free under the schedule, section 229.12(d) requires $550 of them to be reachable in cash or by irrevocable payment by 5:00 p.m., and the regulation says plainly that this $550 sits on top of the $275 from the day before. It will not pay anybody who matters. It will tell you by teatime whether the release actually happened.

The damage is to the calendar, not the balance

People describe a hold as money missing. I think the real cost lands on the calendar rather than on the $31,275. The hold does not delay one payment. It delays whatever you queued behind the deposit. Payroll runs on a fixed date. Vendor terms run on a fixed date. A seven business day ceiling on a large check turns a payroll you funded two weeks out into a coin flip, and the flip happens without anybody telling you.

What the complaint file looks like

I pulled the CFPB complaint database for checking and savings accounts, narratives searched for a hold on a deposit, everything filed since 1 January 2024. I got 5,864 complaints back, which is more than I expected. Managing an account carries 4,610 of them, closing an account 722, a problem caused by low funds 231, opening an account 152.

The outcomes are what I keep going back to, and I read the 4,610 outcomes three times over. Closed with an explanation, 3,676 times. Closed with non-monetary relief, 505 times. Closed with monetary relief, 426 times. Money changes hands in 9.2 per cent of these cases, and somebody explains the policy to you in 79.7 per cent of them, a gap I found grim reading. Slowness is not the issue, since 4,583 of the 4,610 were answered on time.

By institution: JPMorgan Chase 770, Bank of America 591, Capital One 361, Wells Fargo 356, Truist 252, Citibank 187, Navy Federal 160, PNC 149. Those roughly track deposit market size. I would not read a league table into them. In 2,014 cases the company declined to give any public response, and in 184 it said it had acted appropriately as authorised by contract or law, which after reading part 229 I suspect is often simply accurate.

The fine is not compensation

Section 229.21(a) makes a bank that breaks subpart B liable for actual damage plus an additional amount the court may allow, and in an individual action that additional amount runs no lower than $125 and no higher than $1,350. A class action is capped at the lesser of $672,950 or one per cent of the bank's net worth. Costs and a reasonable attorney's fee come on top of a successful action.

Set $1,350 against $31,275 held outside the schedule for eleven business days. I did that sum and then sat with it a while. The statutory number is a fine that happens to be payable to you. It was never designed to make you whole. Anything that would make the claim worth bringing has to come out of actual damage, which means the specific fee, the specific lost sale, the specific late charge, documented on the day it happened. Almost nobody assembles that afterwards. I think that gap explains the 9.2 per cent better than bad faith does.

Things I could not establish

The complaint database takes consumer complaints, and no field separates a business account from a personal one, so those 5,864 rows describe accounts in general. I cannot tell you the business share of those 5,864 rows and I am not going to guess at it. I went looking for a published FDIC or CFPB series on holds against business deposits and found nothing.

I also could not settle the local and nonlocal split from the regulation itself. The two-tier schedule turns on whether the paying bank sits in the same Federal Reserve check-processing region as the branch you deposited at, and section 229.2 defines that region as the geographical area served by an office of a Reserve Bank for check processing. How many regions currently exist appears nowhere in part 229. Until I can source that properly I will not tell you which schedule your check falls under. Ask your bank which one it applied, in writing, and keep the answer.

None of this is legal advice and we are not your counsel. A hold that arrives alongside a fraud investigation, or one that outlasts the ceilings above, belongs with a lawyer on the day rather than on a page like this one.

The sentence I keep turning over is the burden line in section 229.13(h)(4). A bank may hold funds longer than five or six business days, and if it does, establishing that the longer hold was reasonable is its job, not yours. I have not found out what section 229.13(h)(4) expects a bank to produce, or whether any depositor has ever made one try. It reads like the most useful line in the whole part. It also reads like nobody has picked it up.