3 min read

Are Funds Immediately Available When Opening a Bank Account?

Written By

Clay Shiffman

Are my Funds Immediately Available when I Open a Bank Account?

Imagine you’ve just received payment from a major client. So, you deposited the check in your new bank account. But the bank doesn’t give you access to the money right away. You wonder why the bank isn’t letting you withdraw funds available in your personal account. Are funds not immediately available when you open a new checking account?

In this article, we'll examine why your bank sometimes holds funds and how long you must wait for the check to clear. So, stay tuned and keep expanding your financial know-how.

If you need help opening a bank account in Canada, consult with KOHO professionals.

Making Sense of Funds Availability

If you have deposited considerable money in your high-interest savings account, the bank may hold these funds, preventing you from making purchases or withdrawing the cash. A temporary delay in funds availability is called a bank hold. After you’ve deposited a check, the bank has to validate it before making it available for withdrawal. Bank deposits may go in a “deposit hold”; when you deposit a check, it often goes in a “check hold”. Federal Regulation CC covers the legal side of these bank holds.

In some cases, making purchases with a savings account isn’t possible at the time due to a hold. In such a case, funds availability depends on the following factors:

· How much money have you deposited?

· What kind of deposit did you make?

· Did you deposit it during business hours?

The following section will examine why a bank holds funds and how many days pass before you can access your hard-earned cash.

Available Balance vs. Current Balance

You may not have immediate access to deposited funds because of the nature of your bank account. It would be best to learn the difference between available and current balances to understand better why a bank holds funds.

When you open a new checking account, you'll typically see two types of balance:

· Available balance: Funds you can access immediately

· Current balance: All funds, including pending transactions

You cannot withdraw all of the funds in your bank account if there's a mismatch between your available and current balance. So, how do you improve your fiscal health effortlessly? Try to build your credit with KOHO, a FinTech company that has been serving Canadians since 2014.

What’s the Logic behind Restricting Funds Availability?

Your bank holds funds in some cases as a fraud prevention measure. If the bank suspects an illegal or fraudulent activity, it will not make those funds available immediately. Otherwise, you may not have sufficient balance in your bank account to return this money to the bank. It'll drive your balance to the negative side, causing you and the bank a headache.

The Legal Side of Funds Availability

You may have heard of the Federal Deposit Insurance Corporation (FDIC) and other regulatory bodies overseeing America's financial health. Now, we'll explore the legal side of funds availability when opening a new account. All banks hold funds as per EFAA (the Expedited Funds Availability Act). Enacted in 1987, it enforces banks to give people immediate access to checks and deposits within a very reasonable period. EFAA, in turn, was passed under Regulation CC.

Simply put, Regulation CC affects your bank’s funds availability policy. It dictates when all deposits must become available to people. It would help to look into the account agreement when opening a new bank account. Or, try to search for funds availability policies online.

When can a Bank Extend the Hold?

How long can banks hold funds? It depends on the bank's funds availability policy. For instance, withdrawing money from the same bank's ATM has different guidelines. The best way to ensure same-day funds is to make cash deposits in person at a branch. Here are a few points to keep in mind when exploring the subject of funds availability (source: Regulation CC):

· If the deposit location is another bank's ATM, funds will be available after five business days.

· For ATM or night deposits, you should wait two business days for funds to be available.

· Wire transfers, ACH, and direct deposit are available until the second business day.

Valid Check Hold Exceptions

In some cases, banks hold funds for many business days due to a valid reason. Regulation CC outlines all these reasons. So, here are six situations in which you may not have immediate access to your money:

· Emergency conditions: A natural disaster can interrupt communications, limiting your access to the funds.

· New account: If your bank account is older than 30 calendar days, you may have to for funds availability.

· Redeposited checks: The bank may hold the funds if the customer or other financial institutions redeposit a check.

· Large deposits: Large deposits (i.e., greater than $5,000 in a single banking day) are grounds for funds unavailability.

· Collectability failures: The funds will be inaccessible if there's reasonable doubt that a check is not collectable from a bank or branch.

· Repeated overdrafts: It’s an account with a negative balance on at least six days in the last six months. Reach out to KOHO for swift overdraft protection coverage.

Bank Mix-Ups and Cut-Offs

Your deposited funds may be available after a bank mix-up or an overlap with the business timing. Here is how you can easily understand these two concepts:

· Bank mix-ups: Mistakes happen; they're a part of life. So sometimes, banks and other financial institutions can send the money to the wrong account, limiting funds availability.

· Bank cut-offs: When does one business day end and the other begin? It determines if your funds are same-day funds or available after a few days. This cut-off time can’t be earlier than 2 PM for in-person cash deposits.


In a nutshell, the bank holds funds (limiting funds availability) to prevent returned payments from your bank account. If someone writes you a check, the bank must ensure it is legit and won't bounce. So, you may have to wait a few business days to withdraw cash after opening a new bank account. It's a fair way to prevent illegal or fraudulent activity from hurting your fiscal health and account balance.

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|Read this article to learn if the interest rate on a chequing account is calculated weekly or monthly|

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