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. Check Clearing For The 21st Century ...

    A federal law that took effect on October 28, 2004, and gives ...
  3. Cashier's Check

    A check written by a financial institution on its own funds. ...
  4. Bounced Check

    A slang word for a check that cannot be processed because the ...
  5. Certified Check

    A type of check where the issuing bank guarantees the recipient ...
  6. Federal Reserve System - FRS

    The central bank of the United States. The Fed, as it is commonly ...
Related Articles
  1. Economics

    The Federal Reserve

    Few organizations can move the market like the Federal Reserve. As an investor, it's important to understand exactly what the Fed does and how it influences the economy.
  2. Savings

    Are Your Bank Deposits Insured?

    Learn how the FDIC is helping to keep your money in your pockets.
  3. Credit & Loans

    The Evolution Of Banking

    Banks are a part of ancient history. Find out how this system of money management developed into what we know today.
  4. Personal Finance

    Using Economic Capital To Determine Risk

    Discover how banks and financial institutions use economic capital to enhance risk management.
  5. Forex Education

    Get To Know The Major Central Banks

    The policies of these banks affect the currency market like nothing else. See what makes them tick.
  6. Options & Futures

    The Ins And Outs Of Bank Fees

    These service charges could nickel and dime you right out of your nest egg.
  7. Investing

    Are all bank accounts insured by the FDIC?

    The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government that protects you against loss of deposit if your bank is FDIC insured. Banks are not mandated ...
  8. Economics

    What's the Federal Funds Rate?

    The federal funds rate is the interest rate banks charge each other for overnight loans to meet their reserve requirements.
  9. Economics

    Evaluate Your Investment Portfolio For 2015

    The beginning of a year is a good time to evaluate your investment portfolio and think about how to position it going forward.
  10. Personal Finance

    What precise measures are implemented in most monetary policies?

    Read about some of the precise measures implemented in most monetary policies, and learn why monetary policy is considered important.

You May Also Like

Hot Definitions
  1. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  2. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  3. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  4. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
Trading Center