Can someone explain

[Frodo]

I am at a loss trying to figure this out

When I write a check the store verifies the funds are available with in seconds

When I deposited a check into my account from an insurance company. The bank dropped a hold of 9 days on the check to verify availability of funds

Call me crazy but this just does not add up in my little book of stuff that should add up

If the store can verify within seconds why can't the bank do the same thing?

 

[Bacpacker]

I am at a loss trying to figure this out

When I write a check the store verifies the funds are available with in seconds

When I deposited a check into my account from an insurance company. The bank dropped a hold of 9 days on the check to verify availability of funds

Call me crazy but this just does not add up in my little book of stuff that should add up

If the store can verify within seconds why can't the bank do the same thing?

Because the bank is making money off your money for those 9 days

 

[12icemaker]

Most big financial companies hold their assets until the last second they can pay them, and they usually release them in a few days after they get paid any interest or dividend on the entire payout amount.

In other words their rules are different than yours because they make the rules and they need their money more than you need your don't cha see!!!

 

[Frodo]

Damn. Double Damn. That is what I was thinking.

 

[Neb]

I am at a loss trying to figure this out

When I write a check the store verifies the funds are available with in seconds

When I deposited a check into my account from an insurance company. The bank dropped a hold of 9 days on the check to verify availability of funds

Call me crazy but this just does not add up in my little book of stuff that should add up

If the store can verify within seconds why can't the bank do the same thing?

Because the rules haven't been updated.

40 or so years ago I was working for banks and the federal reserve. At that time the story was...

Every few days reps from all of the banks showed up at the federal reserve bank for a meeting to settle all of the checks drawn on other banks. Bank A would state we have checks drawn on bank B and this many on bank C. Bank B would claim how much was drawn on bank A and the amount on bank C....

After the differences were settled the checks would transfer to the banks they were drawn on to be processed then returned to the customer. Meanwhile the cash was transported via armoured trucks.

The rules governing the banking business were set up to allow for that process. I have not heard of the rules changing.

So the above speaks to how fast cash is moved between banks and actually get money in your account. The stores are just checking if there is money in your account.

And as was stated above, the funds in flux are used by the banks to make money. So there is no pressure from the banking industry to change the old rules.

Ben

 

[Magus]

Get a debit card bro, and attach it to a second account. No more waiting.

 

[Neb]

Get a debit card bro, and attach it to a second account. No more waiting.

That wouldn't help with a check from an insurance company.

Ben

 

[Magus]

That wouldn't help with a check from an insurance company.

Ben

No, it would not, it would eliminate it entirely by way of direct deposit.

 

[DrHenley]

Because the bank is making money off your money for those 9 days

BINGO!!!

 

[havasu]

Sometimes they will release a portion of the money immediately, but I'm sure this is just a good will gesture, based on your past behavior.

 

[Tacitus]

Could it be a side effect of our fractional banking system? That is, the bank only has to have 10% of your money for you to withdraw at any given time. They owe 100% to you, but they don't have to give it to you right away...because they don't have it, because they have loaned it out to others.

If you "deposit a check," aren't you really just giving them a piece of paper which is not cash itself, but rather is merely a document which indicates to the bank how to go and get money from another bank? And, after all, the bank they go to may need to get money from another bank, and that bank may or may not have the money...and so on. So, it may just be a matter of them getting things settled.

The store, on the other hand, is just giving you a short term loan by "verifying" your check. It is just good customer service. They aren't actually getting paid when you give them the check. The verification is just a check to see if they can trust your bank. They could, at any time, decide not to give those short term loans to you...which they might do if checks start to bounce.

In the electronic age, this act of "going and getting the money" should be done very quickly...and yet, I know it is easy to overestimate the efficiency of business transactions. When you see the how the sausage is made, you start to see why things take longer than they should.

Having said all of the above, I am most definitely not an expert.

 

[old tex]

Once upon a time I wrote a "hot" check. It was 5:30 in the evening & my bank was closed. My payday was the next day (see where this is going?). My check hit the bank that day before the bank processed my deposit. That cost me 35 dollars. One month later I had changed & my check was deposited in my local credit union. I haven't used a bank for anything in over 40 years. They love to nickel & dime you to death. My SF has to have a balance of $10,000 in his checking account or they will charge him 5 bucks a month. If he wants deposit slips for his account he has to pay for them (when did they stop coming with the checks?). I will never go back to banking with a bank, never ever!

My credit union (we use 2) once approved a loan for me that I could write a check on that day & then mailed me the paperwork. No signed paperwork for a loan that I could use that day? Find a bank that will do that.

 

[teeceetx]

Checks are cleared thru the Federal Reserve System - ACH - Automated Clearing House. When a retailer verifies funds, it's just a snapshot of NOW. When the check is actually presented via ACH, those "verified" funds may no longer be there. They used to wait until the physical check reached the bank, but now because of "Check 21", an image is sent rather than the physical check. Actually clears in a day. Any longer holds are likely due to "float" - free use of funds while clearing. There are exceptions ...

 

[joel]

Because the bank is making money off your money for those 9 days

It started out to be a safety net, because it took ten days for a paper check to send funds back to the casher account.
That changed, but the bank kelp a good money maker going, mostly because people have no Ideal want goes on in the banking world.
On a thousand dollar check, my Credit Union will give me 1/3 of the check or about three hundred dollars, when I give them the check.

 

[AMC]

Get a debit card bro, and attach it to a second account. No more waiting.

Debit cards can be stolen without recompense. Credit cards have different rules.

 

[viking]

Most big financial companies hold their assets until the last second they can pay them, and they usually release them in a few days after they get paid any interest or dividend on the entire payout amount.

In other words their rules are different than yours because they make the rules and they need their money more than you need your don't cha see!!!

When I worked for the local school district as custodial/maintenance the superintendent would hold our checks for as long as possible on pay day to milk as much as they could out of interest, for those that worked a later shift, we often couldn't make it to the bank and had to wait until Monday.

 

[Quark]

Because the bank is making money off your money for those 9 days

That's it right there.