"Can a bank really..."
remove deposits from my account after the funds are made available for withdrawal?
Yes. The federal consumer protection laws do not prevent banks from recovering funds related to checks or electronic deposits that are returned unpaid, even when the bank has already given the consumer use of the deposited funds. This includes situations where the deposit was a fraudulent check and the consumer was unaware of the fraud when depositing the check. However, state laws may contain other bank responsibilities and liabilities related to checks and electronic deposits. Contact your state banking department for more information on state laws related to checks and electronic deposits.
wait to give me access to the money that I deposit?
Banks can place "holds" on checks for a variety of reasons. Most commonly, banks hold a check because the collection of the money may be in doubt or the check looks suspicious for some reason. Holds may also be placed when a large dollar amount (more than $5,000) is deposited or when funds are deposited into a new customer's account.
A federal law, the Expedited Funds Availability Act (EFA), contains rules that allow banks to delay or "hold" funds deposited by check. You may want to review the account agreement you received when you opened your account for details about your bank's funds availability policies and procedures. A bank must give you a copy of its deposit availability disclosure upon request.
|Type of Deposit||When Available **|
|Direct deposits||Day of deposit|
|Wire transfers||Next business day (Mon-Fri)|
|First $200 of any non-"next-day" check deposited||Next business day (Mon-Fri)|
|Cash*||Next business day (Mon-Fri)|
|U.S. Treasury checks (deposited in person or at ATMs owned by your financial institution)||Next business day (Mon-Fri)|
|U.S. Postal Service money orders*||Next business day (Mon-Fri)|
|State or local government checks*||Next business day (Mon-Fri)|
|Cashier's, certified, or teller's checks*||Next business day (Mon-Fri)|
|Checks and money orders drawn on another account at the same financial institution||Next business day (Mon-Fri)|
|Federal Reserve Bank and Federal Home Loan Bank checks*||Next business day (Mon-Fri)|
|Any other checks and non-U.S. Postal Service money orders||Second business day (after the day of deposit)|
|Deposits (of items noted by "*") made at an ATM owned by your financial institution||Second business day (after the day of deposit)|
|Deposits made at an ATM not owned by your financial institution||Fifth business day (after the day of deposit)|
** Maximum hold allowed; your funds may be available sooner - check with your financial institution
post withdrawals from my account from the largest dollar amount to the smallest to get more overdraft fees?
Federal law does not regulate the order that banks post checks to your account, but some state laws might. Bank computer systems may be designed to process checks randomly, from the largest to the smallest check amount, or based on some other method.
Some banks post the largest checks before the smallest checks assuming that larger checks are the most important payments being made by the customer, for items such as mortgage or rent payments, or auto loans. You may want to ask your bank which method it uses to post checks.
refuse to cash my check?
There is no federal law that requires a bank to cash a check, even a government check. Some banks only cash checks if you have an account at the bank. Other banks will cash checks for non-customers, but they may charge a fee. You should shop around for the bank that best meets your needs.
change the terms on my deposit account?
There is no federal law preventing a bank from changing the interest rate it pays on your deposit account, or charging additional fees for maintaining your account. However, federal law requires a bank to let you know about significant changes before they take effect. Notices about changes and their effective dates may be printed on your monthly statement, sent to you in a separate letter, or included with other information in a pamphlet or brochure. The bottom line is that you should carefully read the information a bank sends to you.
increase the rate or add fees to my credit card account?
Changes to the Truth in Lending Act that became effective on February 22, 2010, state that a bank cannot increase the interest rate or fees on your credit card unless it tells you about the change in writing at least 45 days in advance. In addition, a bank generally cannot apply the increased rate or fees to your existing balance. But, there are exceptions. Read What You Need to Know: New Credit Card Rules for more information on increases in credit card interest rates and fees.
keep the rate on my mortgage loan the same even if the Fed lowers the interest rate?
The Federal Reserve sets a target for the interest rate at which depository institutions lend balances overnight to other depository institutions. This so-called "federal funds rate" is important for monetary policy, but does not directly affect the interest rate established for your home mortgage. The interest rate on your mortgage is established by your lender according to the terms and conditions of your loan contract or promissory note. If you have a "fixed-rate" home loan, your interest rate is locked in for the duration of the loan. If you have a "variable-" or "adjustable-rate" loan, your interest rate could change throughout the life of the loan depending on the loan terms. Your loan contract or note with the bank will tell you how your bank determines changes to your interest rate.
require an escrow account for my home loan?
Yes. Some lenders may require you to pay extra money with your monthly payment to cover the cost of property taxes and insurance, while others may give you the choice to save for those expenses yourself. However, if you are getting a "higher-priced" loan, then the lender is required by Regulation Z to establish an escrow account for your loan. Higher-priced loans are determined by several factors, including the interest rate relative to the Freddie Mac average prime offer rate, the loan term, and whether the loan is a first or second lien. To determine if you have a higher-priced loan, you may use the FFIEC's rate spread calculator. You may also find information on the Department of Housing and Urban Development website about how escrow accounts work and your rights regarding escrow accounts.
ask me for additional information when I make a large deposit or withdrawal?
Yes. The bank may be asking for additional information because federal law requires banks to complete forms for large and/or suspicious transactions as a way to flag possible money laundering. These forms go to the Internal Revenue Service and the Department of Treasury's Financial Crimes Enforcement Network ("FinCEN"). Federal law defines a "large" transaction as a transaction or series of transactions totaling more than $10,000. A suspicious transaction is one where the institution has reason to believe that, or is unsure whether, there is suspicious or illegal activity going on. A bank faces large money penalties and its employees may be imprisoned for not complying with the federal law.
require me to provide personal information to get a loan or open a deposit account?
Yes. A bank is required by law to verify and form a "reasonable belief" that it knows your true identity. At a minimum, the bank must collect and verify 1) your name; 2) your date of birth; 3) your address; and 4) your taxpayer identification number or social security number. To verify the information you provide, a bank may request a valid government issued identification, such as an unexpired driver's license or passport. It may also use other methods of verification, such as comparing the information you provide against your credit report, verifying your place of employment or checking references with other financial institutions.
- More information about customer identification regulations:
send me a notice stating that I'm denied credit even though I did not apply for a loan?
Yes. A bank must send you an adverse action notice (sometimes referred to as a credit denial notice) if it takes an action that negatively affects a loan that you already have. For example, the bank must send you an adverse action notice if it reduces your credit card limit. You may also get adverse action notices if you recently purchased a car and the car dealer sent your loan application to several banks before deciding which should make the loan. If adverse action is taken because of information the bank received from a credit bureau, that will be stated in the notice along with the credit bureau's telephone number. This information is required by law so that you have the opportunity to follow-up with the credit bureau if you think the information is wrong. Learn more about How to Dispute Credit Report Errors.
If you do not understand why you received the adverse action notice, or if you want more information about the notice, you should contact the bank that sent you the notice. The bank is required to list its name and address on the notice.
not give me back my checks?
No federal consumer protection law requires your bank to return your original check. Many banks destroy original paper checks after putting them into electronic form, often to save the expenses of storing or mailing paper checks. Increasingly, check processors make electronic images of your checks and destroy the paper checks that you wrote. A law called Check 21 gives you the same legal protections whether your bank sends your original paper checks back to you or sends you images of your paper check. Please refer to the Board of Governor's pamphlets What You Should Know About Your Checks and A Consumer Guide to Check 21 and Substitute Checks for more information.