What are 'Bankable Funds'

Bankable funds are forms of payment that are accepted at financial institutions. Retailers and other organizations that directly accept payments from customers typically request that any payments be made in forms that can be redeemed and accepted by the bank.

BREAKING DOWN 'Bankable Funds'

For example, cash and cashier checks are forms of bankable funds; they are readily accepted and deposited at all major banks. On the other hand, other forms of assets such as precious metals and stocks (although they may have considerable value), will generally not be accepted as a form of payment. That’s because these assets, though valuable, are not cash or easily converted to cash. A merchant may have to go to considerable trouble and expense to convert these forms of payment to currency; furthermore, the value of an asset such as precious metal or stock may drop in between the time that a merchant accepts it as payment, and the time that he or she attempts to convert it to currency. Currency, however, is not as volatile.

Personal Checks as Bankable Funds

Merchants may accept personal checks as bankable funds because they are relatively easy to convert to cash, especially when check conversion technology is employed. However, it can take a few days to convert a personal check to bankable funds, so some merchants will not accept them. Some merchants may also refuse personal checks out of concern that the checks might be fraudulent.

Furthermore, while most banks will accept a personal check for deposit, they may not make the funds available immediately. Most banks will hold funds deposited via personal check until the check clears, usually the next business day.

Money Orders and Cashier’s Checks as Bankable Funds

Money orders and cashier’s checks are also considered bankable funds, because they are fairly easy to convert to cash. However, just as with personal checks, most banks will place a hold on a money order until it clears. The best way to convert a money order to cash is to cash it at the issuing institution, such as Western Union. These cash funds can then be immediately banked.

A bank may also choose to place a hold on a cashier’s check until it clears, especially if the check is for an amount greater than $5,000. However, the bank must make the first $5,000 available immediately. However, because funds from a cashier’s check are banked immediately upon deposit, it is possible to withdraw funds from a fraudulent cashier’s check before the bank realizes it is fraudulent.

RELATED TERMS
  1. Check Conversion

    Check conversion is a reformatting service offered by banking ...
  2. Immediate Credit

    Immediate Credit is the Federal Reserve practice of "clearing" ...
  3. Available Funds

    Available funds is the amount of money that is in your bank account ...
  4. Availability

    Funds that have been deposited by third-party check into a customer's ...
  5. Cleared Funds

    Cleared funds are the balance in an account that is able to be ...
  6. Substitute Check

    A substitute check is a paper reproduction of a check that is ...
Related Articles
  1. Personal Finance

    How to Cancel a Check

    If you've had a personal check lost or stolen, the next best step is to cancel the check by putting a stop payment on it.
  2. IPF - Banking

    Top 5 Reasons Banks Won't Cash Your Check

    Learn the top reasons that a bank won't cash your check, and find out what steps you can take to prevent those scenarios from happening.
  3. Investing

    When Using a Money Order Makes Sense

    Money orders are usually the least expensive way to send "cleared" funds to pay a bill (or traffic ticket). Here's how they work and what to watch out for.
  4. Personal Finance

    The 8 Best Bank Perks

    Many banks are now offering free perks to entice new customers.
  5. Investing

    3 Best High-Yielding Convertible Bond Mutual Funds (LACFX, FACVX)

    LACFX,FACVX,VCVSX: Learn about three of the highest-yielding options available.
  6. Personal Finance

    10 Bank Promotions That Pay You To Open An Account

    Find out which banks are running cash promotions this summer.
  7. Investing

    Introduction To Money Market Mutual Funds

    Learn about the easiest way to benefit from money market securities.
  8. Investing

    Convertible bonds: pros and cons for companies and investors

    Understand what effect convertible bonds have on investors and companies. Find out the advantages, disadvantages, and what the issue means from a corporate standpoint before buying in.
RELATED FAQS
  1. How does bouncing a check affect my credit score?

    Learn the many indirect effects on your credit score when you bounce a check. Read Answer >>
Trading Center