The Top Three Questions About Checking Accounts
Checking accounts may be America’s most common transactional account, but they are also a classic case of a frequently used item that is imperfectly understood. You have probably had a number of checking account related questions over time, and you are not alone. Below you will find the top three questions about checking accounts and their answers for your reference.
Why can’t I access my deposits?
Checking accounts are designed to have money flowing in and out of them at the account holder’s will. This is why they are also known as demand deposit accounts. You make a deposit, you can demand that spending ability . . . or can you?
A unique feature of checking accounts are holds. Holds on checking accounts mean that even though a deposit has been made, the funds aren’t available for spending until a later date. The rules around holds can vary from bank to bank and between credit unions and banks, but at their core they are governed by Regulation CC, the Expedited Funds Availability Act.
The point of Reg CC, as it is called in the business, is not actually to be a monumental pain in the rear. The regulation was created to protect banks and consumers against check fraud. Unfortunately, the environment in which it was created was a time when paper checks were a predominant feature of consumer spending, unlike the plastic dominated and instant transfer culture that exists now.
Although regulations are in the works to change Reg CC, consumers at the moment have a bit of a conundrum. Thanks to another regulation known as Check 21, electronic version of checks are as good as paper checks, meaning that outgoing funds can be processed immediately, debiting the account on the spot. Incoming funds, on the other hand, still are subject to the hold rules, meaning that consumers have to wait for the full processing of the transaction before they can access their funds.
To manage around the applicable holds and prevent unnecessary insufficient funds charges or bounced checks, here are the basic rules on holds:
- Reg CC does not apply to checking accounts that are less than 30 days old. During this time, accounts are on high fraud watch by the bank and additional holds may be applied, which should be explained to you by the person who helps you open the account.
- Electronic direct deposited funds have to be made available the same day, as do the first $100 of other deposits.
- Funds have to be available after two business days for local checks and the first $4,900 of large deposits
- Funds have to be available after five business days for non-local checks
There are additional exception holds on the market, generally put in place on extremely large deposits and suspected fraudulent checks, but these will usually be explained at the time of deposit by the teller.
What are all these fees?
Although free checking accounts are advertised all over the banking world, most checking account holders are well acquainted with fees. Checking account fees can include transaction based fees, cash access fees for using non-network ATMs, overdraft fees, and monthly service fees.
It really does pay to take the initial fine print forms that come with an account and get to know them well. These will explain exactly which activities trigger fees, so that they can be better avoided. With all the choices available on the market, it doesn’t make sense to pay fees for basic checking, so read carefully and shop around to get the best no-fee accounts.
What special benefits am I missing?
Modern checking accounts often have special account holder benefits associated with them. These can include purchase protection, travel insurance, life insurance, membership discounts at participating merchants, and the opportunities to earn points for rewards. These programs can change rapidly, so it pays to refresh yourself annually on the benefits associated with your account.
The most common new benefit is a points/rewards program for certain types of spending. As participating merchants will change more than the underlying program, bookmarking benefits explanation page for the program (most are online) will ensure that you don’t miss any of the associated benefits of your checking account.
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