Holds – check writer’s vs receiver’s bank
You deposit a check into your account at Chase. They claim it will take 10 days to clear. But the person who wrote the check shows the funds debited after 4 days. Hmm. Why is Chase holding onto the money for an extra 6 days.
Bad bad Chase | admin April 10, 2010
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By coakl, January 11, 2011 @ 10:04 am
The problem is that Chase’s computer system cannot verify funds with another bank’s computer. It’s not directly linked; otherwise we’d just have one big national bank for everybody.
Nor does Chase, or any other bank, receive ongoing electronic updates on whether a check is good. The hold period is not updated after the check leaves Chase for the other bank. The only way Chase knows that the check is “good” is if it doesn’t make a “round trip” back from the other bank.
You wait out the clock (2 or 7 business days) and hope the check doesn’t come back. It’s pretty primitive but not everything is as magical as your i-Phone, Tivo, or Twitter feed.
It’s hard to tell how long that takes. Bank of America may return an item in a day or two. The First Savings Bank of Tuscaloosa, Mississippi might take 10 days as the two people in their backoffice shack review each and every check by hand.
This is why the federal reserve sets maximum time limits on check holds. Banks, not unnaturally, select the maximum time for maximum protection from returned items.
By admin, January 11, 2011 @ 10:16 am
Chase’s hold times are MUCH longer than many other banks. My bank usually makes funds available in 2-4 days, not 10 days like Chase.
That is the point, Chase is holding on to the money for the maximum allowed by law here, and not all banks do this.