Immediate Credit

AAA

DEFINITION of 'Immediate Credit'

The Federal Reserve practice of "clearing" checks deposited by member banks on the same day they're deposited. This service is only available when the Federal Reserve has one of its branches in the same city as the bank wishing to process the check. Normally, checks are subject to "deferred availability" which means the amounts are made available within two days of deposit.

INVESTOPEDIA EXPLAINS 'Immediate Credit'

The Federal Reserve's policies on immediate credit and deferred availability often have little to do with the actual policies at your local bank. Some banks make funds immediately available on any checks deposited by their customers, some place limits on the amount available, while still others hold all checks over a certain amount. Consumers should be wary of banks that routinely hold checks even when there is no history of bounced checks. This is often a bad sign, in that a bank may be trying to earn a little extra interest off their customers' money.

RELATED TERMS
  1. Federal Reserve Bank

    The central bank of the United States and the most powerful financial ...
  2. Federal Reserve System - FRS

    The central bank of the United States. The Fed, as it is commonly ...
  3. Bounced Check

    A slang word for a check that cannot be processed because the ...
  4. Check Clearing For The 21st Century ...

    A federal law that took effect on October 28, 2004, and gives ...
  5. Remittance Float

    The time it takes for a payment to be sent from the remitter ...
  6. Cashier's Check

    A check written by a financial institution on its own funds. ...
Related Articles
  1. The Federal Reserve
    Economics

    The Federal Reserve

  2. Are Your Bank Deposits Insured?
    Savings

    Are Your Bank Deposits Insured?

  3. The Evolution Of Banking
    Credit & Loans

    The Evolution Of Banking

  4. Using Economic Capital To Determine ...
    Personal Finance

    Using Economic Capital To Determine ...

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center