Hold

A hold is a temporary restriction a bank places on some portion of an account's balance, preventing that specific amount from being withdrawn or used even though it may appear in the account's total balance. Banks place holds for a variety of reasons, most commonly while waiting for a deposited check to clear, to cover a pending debit or credit card authorization that has not yet fully settled, or as part of a fraud review on an account showing unusual activity.

Because a hold affects the amount actually available for use, it is one of the main reasons an account's displayed balance and its truly available balance can differ, sometimes significantly, particularly right after a large deposit or a series of pending card transactions.

A hold works a bit like a reservation placed on part of a hotel's rooms: the rooms technically exist and show up in the hotel's inventory, but they are not actually available for a new guest to book until the reservation is confirmed or released. Money under a hold similarly exists in the account and shows up in the balance, but is not actually accessible for spending or withdrawal until the bank releases the hold.

• A deposited check has not yet cleared the paying bank, and the depositing bank is waiting to confirm the funds are genuinely available before releasing them in full.
• A debit card transaction has been authorized by a merchant, such as a hotel or rental car company, for an estimated amount that may later be adjusted once the final bill is settled.
• Unusual account activity has triggered a fraud or compliance review, during which the bank restricts access to some or all of the funds pending investigation.
• A court order, such as a garnishment, requires the bank to set aside a specific amount pending the outcome of a legal process.

The length of a hold varies by the reason for it and by the specific rules governing funds availability in the relevant jurisdiction, with check-related holds commonly lasting a few business days and card authorization holds often releasing within a few days of the final transaction amount settling. Fraud review holds can last considerably longer, since the bank needs to complete whatever investigation triggered the hold before it can safely release the restricted funds.

A hold can sometimes contribute to an unexpected overdraft, particularly when a merchant places an authorization hold for an estimated amount that is higher than the transaction's eventual final charge, temporarily reducing the account holder's available balance by more than the transaction will ultimately cost. If other transactions are then processed against that reduced available balance before the original hold is adjusted or released, the account can be pushed into overdraft even though the account holder's actual spending, once every pending hold is finally settled to its true amount, did not exceed their real balance.

An account holder who believes a hold has been placed in error, or has lasted longer than it reasonably should, can generally ask the bank directly for an explanation and a timeline for release, and in many jurisdictions, funds availability rules set maximum permitted hold periods for ordinary deposited checks, beyond which the bank must release the funds unless a specific, documented exception applies. Reviewing the bank's own funds availability policy, typically provided when an account is opened, is the most reliable way to understand exactly what hold periods to expect under normal circumstances, and comparing that stated policy against what actually happened on a specific deposit is the first step before formally escalating a complaint about a hold that seems unusually long.

Consumers who regularly deposit large checks or run close to a zero balance are especially likely to encounter holds, which is why maintaining a buffer above the minimum needed balance is one of the simplest ways to avoid being caught out by a hold on funds that have not yet fully cleared.

• Consumer Financial Protection Bureau