What are 'Uncollected Funds'

Uncollected funds are the amount of a bank deposit that comes from checks that have yet to be cleared by the bank from which the checks are drawn. Essentially, uncollected funds are sums of money that the bank needs to account for prior to releasing the funds to the depositor.

BREAKING DOWN 'Uncollected Funds'

Uncollected funds are deposits that need to be reconciled; that is, the bank from which a check is drawn must acknowledge that the checking account has the funds to cover the check. Once the check clears, the depositor can have access to the deposited funds. Until then, the funds are referred to as uncollected funds, coded as "UCF" or "UF" for short. A check in a large amount that is deposited to an account is subject to a holdback of the majority of the amount. A portion is typically made available immediately to the depositor as long as the customer is in good standing with the bank.

Example of Uncollected Funds

For example, Jack, a longtime customer of Hometown Community Bank, deposits a $1,000 check on Monday. $100 is available for withdrawal right away, but the $900 balance is designated as uncollected funds and Jack must wait until the check clears later in the week to draw upon that amount. If Jack tries to write a check against the balance and it has not yet cleared, Jack's check will be returned to him, often with a returned check fee.

Difference Between Uncollected Funds and Insufficient Funds

Unlike uncollected funds, an account with insufficient funds will not show a deposit pending. Writing a check against an account with insufficient funds will result in a bounced check and incur a fee. If timed correctly, writing a check against an account with uncollected funds will be okay; in this case, the funds would be collected before the bank receives the withdrawal check.

  1. Available Balance

    The available balance is the balance in checking or on-demand ...
  2. Bad Check

    A bad check is a check drawn on a nonexistent account or on an ...
  3. Check Hold

    A check hold denotes the maximum number of days that a bank can ...
  4. Check

    A check is a written, dated, and signed instrument that contains ...
  5. Positive Pay

    Positive pay is a banking service used to match the checks a ...
  6. Canceled Check

    A canceled check is a check that has cleared the depositor's ...
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. Personal Finance

    Where to Put Your Cash: Call Deposit vs. Time Deposit Accounts

    Time deposit accounts and call deposit accounts allow customers to earn higher interest in exchange for less access to their cash.
  4. IPF - Banking

    Top Premium Checking Accounts of 2015

    Which banks offer the best deals for premium checking accounts – and what do you have to do to qualify for one?
  5. Small Business

    Best Checking Accounts For Small Businesses

    What you need to know to choose the best checking account for your small business – and where to look.
  6. Tech

    5 Useless Financial Products That Will Disappear Soon

    Bank deposit slip: what's that? Everyday tools of our financial life that went from indispensable to obsolete.
  7. IPF - Banking

    The Ins And Outs Of Bank Fees

    These service charges could nickel and dime you right out of your nest egg.
  8. IPF - Banking

    The History Of The FDIC

    Find out why this corporation was developed and how it protects depositors from bank failure.
  9. Personal Finance

    Best Checking Accounts For College Students

    Student checking accounts avoid the high fees and minimum balances of some other accounts. Here's how to evaluate offers and find one with the best terms.
  1. How long does it take a check to clear?

    It usually takes two days for a check to clear, but in some cases it may take longer. Discover how banks treat large deposits ... Read Answer >>
  2. Can a checking account go negative?

    Find out about negative checking account balances and their ramifications. Read Answer >>
Trading Center