How many days are banks allowed to hold a check for funds if the check is made out to your business?

Question

The bank is holding a check that was made out to my friends business for 7 business days, is this legal? He also went to the bank of which the customer gave him the check and they would not cash the check or give him a cashier's check. If the customer writes the check out to him in his name they will cash it. Does anyone out there know about banking rules, and would you tell me if this is the norm. Thanks, Bethy

Answer 1

The length of time a check can be held depends on such factors as whether the check is a local or non-local check. Non-local checks apparently can be held up to five business days. You can read more on Federal Reserve regulations dealing with the availability of check funds at this US government site,
http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=12&PART=229&SECTION=12&YEAR=1999&TYPE=TEXT.

Richard
http://www.answers-for-business.com

Answer 2

It is the norm. The bank will usually not make these funds availabe until they have confirmation that they have been received. Sometimes a bank will make the funds availabe earlier if the customer has enough funds in other accounts with the bank to cover the check if it proves to be a bad check. The only way to avoid the wait is to use wire transfer. Even on certified checks, the banks have gone to requiring a waitiing period due to the amount of fraudulent certified checks that are floating around.

Answer 3

Yes it's legal. They have up to 10 days to hold a check for whatever reason they deem necessary. The bank has the option of cashing the check (as in your example) or not, but most do. It is entirely up to the bank and the bank teller to cash any check presented by someone who does not have an account with them.

Answer 4

If you're a new customer (account less than 30 days), 7 days is expected. Once you're established, the funds should be immediately available.