What Is an Availability Schedule?
In banking, the term availability schedule refers to the period of time required for the funds from a deposited check to become available to the recipient. During the time in which the funds are unavailable, they are referred to as being on hold.
- The availability schedule is the length of time banks are permitted to keep deposits on hold.
- These rules are mandated under Federal Reserve regulations.
- In practice, banks often make funds available more rapidly than is required under these regulations.
Understanding Availability Schedules
The maximum number of days that funds can be kept on hold by banks is dictated by the Expedited Funds Availability Act (EFAA). This law was enacted by Congress in 1987 and subsequently became a regulation of the Federal Reserve.
The purpose of the EFAA is to regulate the use of holds by banks by providing different availability schedules for different types of deposits. Today, these rules are referred to as Regulation CC, named after the Federal Reserve regulation that is responsible for putting the EFAA into practice.
Regulation CC distinguishes between four types of deposit holds, each with their own availability schedules. Statutory holds are the most common type of hold, and can be placed on any deposit. Large deposits, meanwhile, can be placed either on individual deposits of $5,000 or more or on a bundle of several deposits totaling $5,000 or more within one day. In situations where an account has been open for 30 days or less, the bank can also implement new account holds.
Initially, the EFAA made a distinction between local and non-local check deposits. However, with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, this distinction was eliminated.
The regulations also allow for a broad category of exception holds, which can be made under various circumstances. Specifically, exception holds can be made when an account has been overdrawn for a certain number of days during the previous six months, when the depository bank has good reason to think the check won't clear, when the instrument being deposited is an image replacement document (IRD) of a previously returned instrument, or when an item is accepted for deposit during a banking computer failure or power outage.
Real World Example of an Availability Schedule
Regulation CC establishes limits to the length of hold periods that can be used by banks, although in practical terms the holdings periods are often shorter than what is permissible by law.
For statutory holds, $200 of the deposit must be made available the first business day after the deposit, $600 the second business day, and the rest on the third business day. The rules are the same for large deposits, except that the bank must make $4,800 available on the third business day, with the rest available no later than the seventh business day.
For new account holds, funds must be available no later than the ninth business day after deposit; whereas for exception holds, they must be available within seven business days.