The Expedited Funds Availability Act (EFAA), enacted by the U.S. Congress in 1987, governs the hold periods on deposits made to commercial banks. It aims to standardize how financial institutions handle deposit holds, ensuring timely access to funds based on the deposit amount and type of account.
Key Insights
- The EFAA regulates how long commercial banks can hold deposits.
- It defines four primary types of deposit holds: statutory, large deposit, new account, and exception holds.
- Checks from insurance drawn on in-state banks must be available five business days after the deposit and seven days for out-of-state banks.
Understanding the Expedited Funds Availability Act (EFAA)
The EFAA mandates that banks must inform customers about their deposit hold policies and any changes to these policies. The Federal Reserve implements the EFAA as Regulation CC.
Types of Holds under EFAA
The EFAA or Regulation CC permits banks to apply four categories of holds on deposited funds: statutory, large deposit, new account, and exception holds. These holds each have specific conditions:
Statutory Holds
Statutory holds can be placed on almost any deposit. The bank must make the first $200 available the next business day, the next $600 on the second business day, and the remaining balance by the third business day.
Large Deposit Holds
For daily deposits exceeding $5,000, large deposit holds allow the bank to make the first $200 available the next business day and $4,800 by the third business day. Any remaining balance must be available by the seventh business day.
New Account Holds
Deposits in accounts less than 30 days old are subject to new account holds, which are lifted on the ninth business day.
Exception Holds
Exception holds apply to accounts frequently overdrawn or when a deposit is suspected to be non-legitimate. They may also apply in exceptional cases like power or system failures. Typically, exception holds last until the seventh business day.
Special Note on Insurance Checks
Funds from insurance checks drawn on in-state banks must be accessible by the fifth business day post-deposit, and by the seventh business day for out-of-state banks.
Understanding the specifics of the EFAA can empower you to better navigate your financial transactions, ensuring you are fully aware of when funds will be available and how to plan accordingly.
Related Terms: Regulation CC, Federal Reserve, Banking Policies, Deposit Holds, Insurance Checks.
