Why Some Banks Apply Holds to Deposits

For business owners, deposits are frequently made into a business bank account. For some, these deposits are made with each transaction while others may have the deposits made on a scheduled weekly or bi-weekly basis. Furthermore, it is not uncommon for a deposit to...  

 

For business owners, deposits are frequently made into a business bank account. For some, these deposits are made with each transaction while others may have the deposits made on a scheduled weekly or bi-weekly basis. Furthermore, it is not uncommon for a deposit to automatically be made from a merchant services account to a business bank account as soon as a certain amount of money is in the account. Regardless of the specific deposit schedule that business owners adhere to when it comes to their business accounts, the fact remains that many banks these days place holds on deposits.

These holds can last anywhere from a day to several days, depending on whether the hold occurs right before a weekend in addition to a number of other influencing factors. Such holds can be quite frustrating, especially for business owners who need access to the funds as a way of paying bills, making necessary purchases, or even paying employees. When a deposit is held, it is typically held up to a certain amount. From there, the business owner is not able to access the funds until the hold is lifted.

While this can be a frustrating experience for any business owner, the fact remains that many bank apply holds to deposits for good reason. In most cases, this is for reasons of security; the bank needs to make sure that the credit card processing has gone through and that the funds were cleared from the purchaser’s account. Depending on the merchant services provider that the business uses, this could take just a few hours or it could take several days. For business owners who want to have smaller holding times, it is recommended that they go with a credit card processing company that specializes in quick release of funds from the buyer’s account to the business account.

From there, the bank may not have to hold the deposit at all, or may only have to do so for a short period of time. This results in quicker availability of funds for business owners, which can make all the difference in the long run.

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