Prevent Banks from Holding Checks
Monday, December 5th, 2011Most of us have experienced it. You go into a bank with a check, hoping to cash it and get the money available in your account that day, only to experience the bank teller stating that they need to put a hold on the check. While this is sometimes reasonable, such as when the check is worth thousands of dollars and you’re a new customer, it happens far to often to those who have been banking with the same bank for years, and have always kept their account in good standing.
Sometimes it makes even less sense than usual. For example, I recently opened a new account at Scotiabank in Canada. I deposited $10,000 into the account and left it there for a few months. I then went in one day (to a different branch than my home branch) to deposit a cheque for $20. Thats right… $20. The teller informed me that because I was a new client, that they would have to put a bank on the check. They also informed me that if I wanted to prevent having holds placed on my checks in the future, I would have to make arrangements with my “home branch.” Of course, this isn’t a usual scenario and isn’t all that common among other banks in Canada and the United States, though most banks will still hold checks for a variety of reasons.
I’ve explored the system further and have determined how you can prevent your bank from holding your checks, allowing you access to your funds faster:
Deposit recurring checks to the same account – For some reason, when you deposit a check on a regular basis, the bank seems to believe that theres no way that its going to bounce. Therefore, if you have a regular payment from your employer, its best to deposit into one account and to continue depositing it into that account. After a few weeks, the bank tellers will start to notice consistency. While it may be tempting at first to take the check to a check cashing store to get access to your funds sooner, if you can just hold off, you’ll be able to prevent checks holds in the future and save tons of money in the process.
Maintain a high balance – While maintaining a high balance is difficult for many, its a great way to prevent checks from being held. Most banks (except the morons at Scotiabank) will not place a hold on checks under $5000 if you have a nice balance in your account.
Ask for a certified check – If someone is paying you with a check, you can prevent it from being held by having it certified. If the payee certifies the check prior to giving it to you, it enables the bank to confirm that it won’t bounce and prevent any risk, thus enabling them to deposit it into your account without placing a hold.
If all else fails, the only other option is to either wait until the check clears, or to visit a check cashing company. While check cashing companies often charge high fees (usually around 3%), its better to cash your check now in order to pay urgent expenses, rather than waiting and letting the bills pile up.