Book Opener

Availability of FundsIn the past, banks were not uniform in the amount of time theyrequired before they would make funds available on checks depositedin customers’ accounts. Some banks held funds longer than others, andmany banks did not disclose their holding policy to their customers.Example 3.Yvette Espinal received a check in the mail from herfather, who lived in a distant city. She deposited it in her checkingaccount and was told that she would not be able to draw acheck on the funds for 10 days. Yvette’s friend inquired at herbank about its holding policy and was told that it would havemade the funds available in five days.To address this issue, Congress passed the Competitive BankingAct. Under the Act, the Federal Reserve Board of Governors issuedRegulation CC.Regulation CC requires banks to make funds available to depositorsaccording to a prescribed schedule (see Figure 24.5). Exceptions aremade for new accounts, accounts that are repeatedly overdrawn, anddeposits of a suspicious nature. In addition, some state laws require evenshorter time periods for banks to make funds available.Regulation CC also requires banks to disclose in advance their policyfor making funds available to depositors. Such disclosures must be madewhen the account is opened as well as on conspicuous notices at tellerstations in the bank.Electronic BankingA popular method of banking, called an electronic fund transfer(EFT) , uses computers and electronic technology as a substitute forchecks and other paper forms of banking. You can go to an automaticCHECK-HOLDINGLIMITSBanks must makefunds available todepositors accordingto a prescribedschedule. Howlong can a bankhold someone’sgovernment checkbefore paying it?Figure 24.5 Maximum Check-Holding Limits Under Federal Law*Type of CheckHolding LimitLocal2 business daysNonlocal5 business daysCashier’s check1 business dayCertified check1 business dayGovernment check1 business dayNew accountsIndividual bank policy appliesDeposits made at automatic teller machines5 business days*Some state banks have shorter holding periods.532 Unit 5: Using Your Purchasing Power