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I've just received my first paycheck in four months (yay!). In the meantime, my bank account went about $150 negative. That's one of the reasons I deposited my paycheck into that bank account - I wanted to pay them.

Instead, the bank has placed the funds on hold for five days!

From the bank's point of view, why does that make sense? What sorts of argument could I use to convince the bank to give me my money sooner?

Update: After speaking to a manager, I found that the hold was due to the fact that this was the first time I'd deposited an item from this company. It still doesn't quite make sense - this is a check from a nation-wide company, drawn on a nation-wide bank. But apparently, they only count that sort of thing per-account (like, maybe the company paid me, but decided against it and put a stop payment on the check).

I spoke to a manager, and asked her to release some of the funds, so that I could get to work this week. She released about US$300, after taking the US$150 that I owed (which is fine).

Thanks for the answers.

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    Glad to hear you found out why, and thanks for posting the update! This will be helpful for others in the same boat. – Chris W. Rea Feb 1 '10 at 16:33
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    Why are you working for a company that is unable to pay you with a electric bank credit, I have not hard of anyone being paid by cheque for years (apart from 3rd world countries that don’t have a working banking system)! – Ian Feb 6 '10 at 23:13
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    It was only the first check that was paper. Subsequent pay will be direct deposit. – John Saunders Feb 13 '10 at 20:41
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    @JohnSaunders you were literally complaining that they were taking time to verify a payroll check. Or did you think you could go yell "Do you know who I work for" at the bank and get them to waive their typical verification times for you? – iheanyi Jan 26 '17 at 18:37
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    @JohnSaunders I'm glad you're not in banking. Just because something can happen in a short time doesn't mean you should allow transactions to go through in that same time. In 2017, banks are still being robbed of millions of dollars because of this fallacy, and they have procedures in place (like you have seen) that help protect against this. The process has a built in time buffer because it is more expensive to fix mistakes than to delay someone getting money. – iheanyi Jan 27 '17 at 0:50
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It is possible that they only do the hold on the first deposit from a given source. It is probably worth asking if they intend to do the hold on every paycheck or just the first one.

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    @JohnFx: if they plan to hold all checks, then they plan for me to walk. – John Saunders Feb 1 '10 at 6:31
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First, congratulations on the paycheck! :-)

On the holds: Is it possible that by allowing your account balance to go negative (into overdraft) that you triggered such treatment of your account? Perhaps the bank is being more cautious with your account since that happened. Just how long did you have their $150 on hold? ;-)

Or, perhaps it's not you specifically but the bank is being more cautious due to credit conditions that have been prevalent these last years. Consider: allowing you to cash a check immediately – when it technically hasn't cleared yet – is a form of credit. Maybe it isn't you they don't trust well enough yet, but the company that issued the check? Checks bounce, and not by fault of the depositor.

I once had a new account, years ago, and discovered a 5 day hold on deposits. The irony was it was a check drawn on the same bank! I called my banker and asked about it – and suggested I'd take my business back to my old bank. I was in the process of applying for a mortgage with the new bank. Holds were removed.

But you may have some trouble with the "I'll walk" technique given the climate and your recent overdraft situation and no leverage – or if you do have some leverage, consider using it.

But before you assume anything, I would, as JohnFx suggested, ask your bank about it. Pay your branch a visit in person and talk to the manager. Phone calls to customer service may be less successful. If it's not a big issue and more a minor technical policy one, the bank may remove the holds. If they won't, the manager ought to tell you why, and what you can do to solve it eventually.

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  • @Chris: $100 of their $150 was "on hold" since December 12. The rest was fees. One of my reasons for depositing the check into this account was to pay them. I've no problem with them being paid, and I think they should charge fees. Beyond that, I don't see why they're holding on to my money. My branch is in a different state, which may be part of the problem. A visit is not likely. – John Saunders Feb 1 '10 at 6:30
  • Hmm, out of state - wow. Agreed, inconvenient to visit. Perhaps it might be worth talking to a nearby bank or credit union and ask about any hold policy before opening an account. – Chris W. Rea Feb 1 '10 at 12:49
  • @Chris: why? Is should I expect every check to be held? – John Saunders Feb 1 '10 at 15:06
  • Not necessarily, no; it all depends on why they are holding the checks. But since you've determined it is a one time thing there's no need to switch. But if the hold were not a one-time thing, I'd consider switching. – Chris W. Rea Feb 1 '10 at 16:32

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