I just received a notice from Talon Title and Escrow that some banks are now holding funds from a Cashier’s Check!
This means if you receive a cashier’s check and you deposit these funds into your bank account, the funds may be held until the check clears. This is the first I’ve heard of this.
There are many situations where this can affect a consumer, but I will point out a glaring problem related to this in a real estate transaction. If you sell your home and plan to use the proceeds of your sale to put down on your new purchase, your down payment could be “held” until the check clears! In other words, you would be homeless for the “holding period”.
I would check your bank’s policy in regards to this topic if you’re planning on selling and buying a house in the near future.
Talon pointed out that having your funds wired into your account is another solution.
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Here’s a response from Charles Adkins who works for the US Department of Treasury :
“A couple reasons, A. Banks need to milk every penny of interest they can in this market, especially on large check deposits so expect the 10 day hold min if they do give you one. B. Because with aggressive lending banks dropping at a rate of one every couple of days, they want to make sure they have funds secured prior to the depositor going out … Read Moreand blowing the cash. Fed Reg CC states that a local check can be held for 2 business days and a non-local check for 5 business days. However, there are some exceptions where it can be held longer. If the amount is over $5,000 (Obviously Title check s are), if your account is new, if you recently went through a period of many overdrafts, and if there is reasonable cause to suspect that the check is noncollectable (my point B). These reasons can extend the number of days that the check can be held. It IS legal and it IS common now days unfortunately.
By the way they are now even using the phrase “call back period” for wire transfers. Some banks are saying on large wire transaction that they have 24-48hrs to review the source of funds, and verify before making funds available. So even wires are taking a small hit with some banks. Just as an FYI on the wire side of things
I talked to Michelle Johnson at Key Bank. She explained there has been an overabundance of fraud lately related to cashier’s checks. That is very unfortunate. They hold it until it clears which can be as much as 9 days!
All that said, the money can clear faster depending on the situation. If it’s a brand new account, this is more likely. However, Michell assured me that well established Key Bank customers won’t have this issue.
The best thing to do is talk to your Branch Manager or banker before the deposit goes in so there’s no surprises. If they will hold it, plan to arrange a wire.
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