A bank holiday is a business day, during which commercial banks and savings & loans institutions are closed to the public. Bank holidays are even more relevant for physical branch locations as some online banking services continue to operate.
Infrequently, a banking holiday can also refer to a day of an emergency bank closure to avert a bank run. This type of bank holiday originated as a result of the Emergency Banking Act of 1933 during the Great Depression in the United States.
How a Bank Holiday Works
In the United States, scheduled bank holidays do not necessarily coincide with the stock market or capital market holidays. School calendars may reflect closures on bank holidays such as Christmas, Memorial Day, and Presidents' Day.
- Direct deposits will not be transferred to employee bank account on a bank holiday.
- Brick-and-mortar banks are closed on bank holidays.
- Bank holidays tend to fall on federal holidays celebrated in the United States.
- Each country defines is own bank holidays.
- Online banks may continue service during bank holidays, depending on the financial institution.
For example, in 2019, according to the Federal Reserve Bank of Chicago, bank holidays are: January 1 (New Year’s Day), January 21 (Martin Luther King Day), February 19 (Presidents' Day), May 27 (Memorial Day), July 4 (Independence Day), September 2 (Labor Day), October 14 (Columbus Day), November 11 (Veteran’s Day), November 28 (Thanksgiving Day), and December 25 (Christmas Day).
While the 2019 Nasdaq holiday calendar is as follows: January 1 (New Year’s Day), January 21 (Martin Luther King Day), February 19 (Presidents' Day), April 19 (Good Friday), May 27 (Memorial Day), July 3 (1pm early market close in the U.S.), July 4 (Independence Day), September 2 (Labor Day), November 28 (Thanksgiving Day), November 29 (1pm early market close in the U.S.), December 24 (1pm early market close in the U.S.), and December 25 (Christmas Day).
Nasdaq is a global electronic marketplace for buying and selling securities, which the National Association of Securities Dealers (NASD) created in 1971 to enable investors to trade on a computerized, rapid and transparent system.
Bank holidays do not incorporate early closes as with stock market holidays. In addition, bank holidays will never occur for two consecutive business days as this could cause too large of a disruption for everyday transactions and financial flows.
Most online banking systems will still allow access by customers even on bank holidays. Popular online banking services include deposits, withdrawals, transfers, and bill payments (essentially, the majority of the basic transactions an individual or retail customer would need throughout the day). In the United States, some well known online banks include Ally Bank, Bank5 Connect, Discover Bank, GE Capital Bank, and Synchrony Bank.