Checks are a great financial instrument for making transactions. They clear without any hassle, usually in two days. However, some banks and credit unions give the provision to fasten the process after you deposit your check. The actual process starts with the initial $200 of the check to deposit being available within the next business day of the submission of the check. The clearance of the whole amount depends upon the sum and your tenure as a customer.
Here is an example of this 2-day business cycle of check clearance.
Tuesday: You deposit a check worth $1,000.
Wednesday: This will be deemed as the first business day where the initial $200 gets available to the bank.
Thursday: This will be the second business day when the rest of the amount will be cleared.
If your check is from the same bank or it’s a cashier’s or government check, then it might get cleared faster.
What are the reasons for the delay in clearance?
Due to some circumstances, some checks might get cleared in more than 7 days after being deposited. Let’s have a look at these reasons.
- The amount for the transaction is large, typically more than $5,000 in just one transaction.
- Your account has not completed a tenure of 30 days.
- You have had several overdrafts in the last 6 months.
- The bank has some ambiguity regarding the payment of checks.
Your bank will surely inform you if they are withholding the check for more days. If you want to ensure the clearance of your check, you can check the receipt or inquire with the bank teller for further questions. Even in such cases, the first $200 of your checks gets available within one business day so that you can access a nominal amount of the money.
The business day starts as soon as the check is received for any institution, given that it is not the closing time for the banking institution. However, for checks that are deposited outside of the ATMs, banks usually do not have cutoff hours before 2:00 p.m. though this varies from bank to bank.
Understanding the process of check clearance
This process starts with the step of getting the money from the payer’s account. If the checks belong to another banking organization, then your request will be sent to a clearinghouse for further processing.
If your check is well below the amount of $5,525, you haven’t submitted a stack of overdrafts, and if your account is operational for more than 30 days, then your checks come under the ideal category for rapid clearance. Sometimes, the bank might even credit the money to your account before the check you deposit is cleared. However, if the bank finds out that the payer’s account is overdrawn, they can take the money back from your account. Make sure you are aware of the bank’s deposit and disclosure policies in such cases.
There are alternatives
Checks are stipulated to take some business days to clear. For faster alternatives, you can consider wire transfers, P2P transfers, and direct deposits that are faster than checks. If you want to send larger funds, a wire transfer is an ideal option. You can also use peer-to-peer applications. These are fast methods that are cheap and do not require you to hold even a pen.
