What is the Expedited Funds Availability Act?

The Expedited Funds Availability Act is a United States law governing how long banks can hold deposits before crediting them to the relevant account. It also covers the way the holding process works. Before the passing of the act in 1987, there was no standardized period between a deposit being made into a bank and the account holder being able to access the funds. The Expedited Funds Availability Act imposes maximum durations. Of course, there is nothing to stop a bank making the funds available earlier than the statutory limit.

There are four categories of deposit that are covered by the Expedited Funds Availability Act. If more than one applies in particular case, a bank is allowed to follow the longest limit. With a "statutory deposit," which is any that doesn't fall into another category, $100 United States Dollars (USD) must be made available on the next business day after the deposit, with the remainder available the following day. With a "large deposit," where more than $5,000 (USD) is deposited into the same account on one day, $5,000 (USD) must be made available on the second business day after the deposit, with the remainder available on the seventh business day. In cases where the account was opened fewer than 30 days ago, the funds do not have to be made available until the ninth business day after deposit.

With these three categories, when certain types of deposit are paid into an account by the named payee, the first $5,000 (USD) must be made available on the next business day, overriding the standard restrictions. Such deposits are those considered less risky such as US Treasury checks, postal money orders, and cashier's checks. This rule also covers checks issued by a municipality such as a state or city government. It also covers checks drawn on an account at the same bank as the one at which it is being deposited.

The final category laid down by the Expedited Funds Availability Act covers several exceptions; funds deposited under these circumstances do not have to be made available until the seventh business day after deposit and the $5,000 (USD)/next day rule does not apply. The exceptions include an account that has been overdrawn for at least six business days in the previous six months, or if the account has been overdrawn by more than $5,000 (USD) for two business days in the previous six months. Another exception is cases where the bank receiving the check has valid reason to doubt it is a good check. There are also rare exceptions such as if the check is deposited when the bank's power is down or computer system are not working.