Expedited Funds Availability Act

Key Takeaways

• The Expedited Funds Availability Act (EFAA) standardizes hold periods on deposits made to commercial banks, as enforced by Regulation CC.
• The EFAA specifies four hold types: statutory, large deposit, new account, and exception, each with specific duration and conditions.
• Banks must make the first $200 of a statutory hold available on the next business day after the deposit.
• Large deposit holds apply to deposits over $5,000, with specific availability rules extending to the seventh business day.
• The EFAA helps ensure customers are informed and treated consistently regarding funds availability.
• Get personalized, AI-powered answers built on 27+ years of trusted expertise.

What Is the Expedited Funds Availability Act?

The Expedited Funds Availability Act (EFAA) is a U.S. law enacted in 1987 designed to standardize how quickly commercial banks must make funds available from customer deposits. This act dictates the types of hold periods banks can apply, including statutory, large deposit, new account, and exception holds. It aims to protect consumers by ensuring timely access to their funds. Implemented through Regulation CC by the Federal Reserve, the EFAA ensures transparency and fairness in banking practices.

EFAA's Role and Implementation

The Expedited Funds Availability Act (EFAA) intends to standardize the handling of deposit holds. Banks and other financial institutions must inform customers of their policies regarding deposit holds, as well as any changes to the policies. The Federal Reserve has implemented the EFAA as Regulation CC.

Types of Deposit Holds Under EFAA

The EFAA, or Regulation CC, allows banks to place four types of holds on deposited funds. These are:

Statutory

Large deposit

New account

Exception

Specific requirements must be met for each type of hold, and some banks will require, as a matter of policy, that funds be held under the hold type that allows the largest amount to be held for the longest period, legally.

Overview of Statutory Holds

Statutory holds can be placed on almost any deposit; under this type of hold, the bank must make the first $200 of the deposit available on the next business day after the deposit is made, the second $600 available on the second business day after the deposit is made, and the rest on the third business day.

Rules for Large Deposit Holds

Large deposit holds are placed when the total of deposits made in one business day is more than $5,000. The availability rules for the first and second business day after the deposit are the same as for a statutory hold, but on the third business day, the bank must make $4,800 of the deposit available, with any remaining amount made available on the seventh business day after the deposit.

New Account Hold Guidelines

New account holds are placed on deposits made to accounts that are less than 30 days old. These holds are lifted on the ninth business day after the deposit.

Exception Holds for Deposits

Exception holds are used for accounts that have been frequently overdrawn, or when banks have reason to suspect that a deposit is legitimate. In rarer cases, they may be used if the bank branch suffers a power outage or a computer system failure. In most cases, however, exception holds are used when an account has been overdrawn for at least six business days out of the six months prior to the deposit, or at least two business days if the account has been overdrawn in an amount more than $5,000. An exception hold may be placed if the bank suspects that the check is fraudulent or won’t clear. It may also be placed on an instrument that has been previously returned for insufficient funds. Exception holds are lifted on the seventh business day after the deposit is made.

Availability of Funds for Insurance Checks

Funds from insurance checks drawn on in-state banks must be made available on the fifth business day after deposit. If the bank is out of state, the funds must be available by the seventh business day after the deposit.

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