Question & Answer

Question: When placing a hold on a large check deposit, do we have to make the first $100 available? If so, on what amount is the hold actually placed?

Answer: There is a lot of confusion about exception holds. It involves several steps of arithmetic when the hold is placed. To illustrate how this works, let's assume a customer deposits a non-local check for $8,000. First, when checks are deposited, the first $100 must be made available on the next business day. Only check kiters and chronic overdrafters are not able to access the first $100. We now have $7,900 left to allocate. Of this amount, only the amount over $5,000 is subject to the large check exception hold. The amount over $5,000 is calculated from the original deposit, not the amount remaining after making the first $100 available. Thus, the large check exception hold is placed only on $3,000.

So, what happens to the $4,900 that got left in the middle? That amount is subject to the applicable availability schedule for local or nonlocal checks. In our example, we have assumed that the check is non-local. Thus, the $4,900 would be subject to a five day hold. (If it were a local check, this would be a two day hold.)

Let's look at the final result. We have $100 available on the next day, $4,900 available on the fifth day, and $3,000 subject to the longer large check exception hold. It all adds up to the $8,000 that the customer deposited by check.

Copyright © 1997 Compliance Action. Originally appeared in Compliance Action, Vol. 2, No. 10, 8/97