If you’ve ever experienced a freeze on your checking account, you know how frustrating it can be. But, do you know why and what it means? Quickly, a freeze on your account is a delay before funds are available in your account.
A hold can be placed on your checking account for a variety of reasons. Typically, a bank will place a hold on a check or deposit you make into your account. The bank does this to ensure that the funds are available before they are made available in your account.
The hold is put in place to protect you as well as the bank. If you spend the money you received by check, but it turns out to be NSF, you will be responsible for covering the negative balance incurred.
An easy way to access funds quickly without fighting with the bank? Consider an online personal loan. Not a loan from a banking institution that might take several weeks to receive, but rather an online micro loan. These can take less than 24 hours to receive and are made by Interac transfer, which means they will never be frozen by your bank.
Why do banks place holds on checks?
The most common reason banks block funds in your account is to ensure that a check does not bounce. In other words, they want to make sure they receive the proper funds before the money is made available to you. You can learn more about this hold by calling your bank and asking for more information!
How does the bank decide to freeze my funds?
If the cheque is for a rather large amount, or if it is from another province, the bank is much more likely to hold it. A representative of your bank will usually contact the bank where the cheque originated to verify that funds are available in the issuer’s account.
However, smaller cheques, cheques from within the province, cheques from the same bank as yours, government cheques, direct deposits and cashier’s cheques are usually available the next business day.
However, cheques for large amounts ($5,000 or more), returned cheques and cheques for accounts with a history of overdraft will often be held longer. This also applies to cheques where the bank has reasonable doubt that the funds are available in the issuer’s account. In all cases, the bank must inform you if it has frozen funds intended for your account.
Keep one thing in mind when dealing with funds held in your checking account. Sometimes the funds will show up in your checking account balance, but they won’t necessarily be part of your available funds. You should always balance your chequing account and be aware of the differences between the actual balance in your account and the available balance.
How long will my funds be held?
The short answer is: it varies depending on the circumstances. But in general, cash deposits and the first $200 of any other deposit (checks, transfers) will be available within one business day. Then, as long as there is no hold on the funds, the remainder of the deposit should be available the next business day.
As mentioned earlier, deposits such as government checks, direct deposits and cashier’s checks should be available the day after they are deposited. There are also exceptions to these rules, such as if you deposit more than $5,000 into your account in a single day.
Can I get a freeze reversed?
The simple answer is: no. It is much easier to prevent a hold from being placed on your checking account than to remove one that has already occurred. The bank has some leeway in determining whether or not to release funds to you. Federal guidelines also set the time frame.
You can also opt for ways to avoid a hold on your account. However, it is important to remember that transferring money between banks does not happen instantly. It takes time for money to move through the proper channels, so it’s always best to give yourself some leeway when depositing checks.
You should also maintain a minimum balance in your checking account and have a good emergency fund to avoid overdrawing your account if the bank holds an incoming check.
A quick loan as a solution?
If your funds are tied up and you have an emergency that requires access to a certain amount of money quickly, there is always the option of a quick loan. Especially when the amount frozen is a significant amount, you will at least be able to get some of it quickly. Traditional personal loans will likely take as long or longer to get than your frozen funds. But an online micro loan can be available in your account within 24 hours, so you could have the money in your account the same day.
In Quebec, there are several companies that can help you quickly! Prêt Alternatif’s services are specifically geared towards customers with urgent needs such as those with unavailable funds. Alternative Lending’s online micro-loans do not require a credit check and therefore have no impact on your credit report. Plus, Alternative Lending uses Interac transfers to send your personal loan to you, so it will never be frozen by your bank!
In short, holds on funds deposited to your account are a matter of security for the banks, and for you. The main purpose of the hold is to prevent you from spending money that you don’t have in your account. In case of emergency, you can consider an online micro loan to get money quickly, without a credit check.