Availability of Funds After Cashing a Big Check?

Nov 29, 2012: Recently we learnt a lesson about withdrawing money after depositing a check for a large amount. Please read on to learn the drama as it unfolded. We hope that our readers can benefit from this experience of ours and avoid paying unnecessary fees.

Day 1 - We went to a physical branch of a bank and deposited a check in the middle of a week.

Day 4 - After 3 business days when we accessed our account online, its register showed that the deposited check 's amount had been credited to our account. More importantly, the available balance register was also incremented to include the check amount.

Day 4 - So we happily went ahead and initiated a bank-to-bank transfer online from this account to another checking account at some other bank. Such transfers are done via ACH (Automated Clearing House); also known as ACH transfers. The transfer was initiated at the receiving account.

Day 6 - We logged into our first bank account to discover that

• an ACH was attempted by the bank where we wanted to transfer our funds
  
• the ACH was rejected
• a $35.00 fee was debited from our account - the charge was for insufficient funds!
• there was one more ACH request pending
  
• the available balance did not include the check amount!

We immediately contacted our bank where we had deposited the check. Their representative had to put us on hold to contact some other internal department. Then she informed us that initially the bank thought that it could encash the check. So the account showed the money as available.

Later our bank could not verify the bank who had issued the check. So it chose to withhold the amount! We were stunned. It was a bank check from Chase. Are we really to believe that a bank check could not be verified? Further is it not a breach of trust when your bank says "Here is your money you can have it" and then take it away the next day without any notice?

The representative gave a courtesy credit for the $35.00 fee. She told us that the money would be automatically available after 3 more business days. In the mean time if we could call Chase bank and obtain any officer's name and direct phone number then the verification would be done immediately and funds would be cleared!

We did not think that Chase was under any obligation to give us the contact information of their banking personnel, hence we did not call Chase. We asked her about the second ACH that is pending: could we stop that, would our account be charged again? She avoided our questions by asking us to call back when everything had settled down!

Day 6 - We called the receiving bank to stop the second ACH. They informed us that in case an ACH got rejected the first time their system automatically tried the ACH once again! This was done as a convenience to the users without any fee. Further, they informed us that these procedures were provided in details in their agreement with us.

Well, they sure have their back covered for better or worse. No complaints. Bottom line is they could not do anything at that point.

Day 8 - The funds from the check was still unavailable and the second ACH had been rejected. A $35 insufficient funds fee had been charged for the second time. A long and dissatisfying phone call took place.

We spoke with the supervisor as well. He simply did not admit that it was the bank's fault. He informed us that as per the bank's policy they could not reimburse the insufficient funds fee twice. We obtained an address from him for lodging a complaint. Basically we were "shown the door".

Day 9 - We discussed the matter and decided that it was not worth our time and effort to further pursue it. We accepted a loss of $35.00 though we felt we were cheated.

There are some valuable lessons that this incident taught us. We summarize them here for the benefit of all.


For checks less than $5000 the money is usually available within 3 business days.

Usually for checks larger than $5000 it takes up to 7 business days for the funds to be cleared.

Do not trust the online account register. The system may show us transient data which does not necessarily depict the true picture.

If the amount is larger than $5000 always speak to a representative, note down his/her name/details and ensure that the funds are really available for withdrawal. If in doubt it would be better to wait for a couple of days for the funds to clear.

Last but not the least, read the fine print and know the rules of the game.

Image Source(s): iStockPhoto

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