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#302867 - 04/22/10 03:34 PM Can anyone with banking experience explain this?
htnut
Unregistered


Last week I deposit a cheque and the teller says they need to hold it for a week before I gain access to the funds. No problem, I understand the cheque can bounce.

So this week I request a bank draft instead, but upon deposit the teller still says they need to hold it for a week. So I asked her, "What's the point of a bank draft then if it is subject to the same holding time?" The teller told me there's no difference between a cheque and a bank draft. Is this true? Then why does the bank charge a fee for a bank draft?

Also, both times the teller asked me "Is it OK to hold it?" and "Do you agree to the hold?" I said "No, I don't agree." both times and asked for other options but they both said I had no choice. Is this true? If so then why do they bother asking?

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#302868 - 04/22/10 03:54 PM Re: Can anyone with banking experience explain this? [Re: ]
Adrian Offline
axiomite

Registered: 12/27/08
Posts: 6613
Loc: It's all about the location.
Sounds a bit odd. Isn't a Bank Draft basically similar to a Certified Cheque? Maybe inquire at a competitor's bank as to how they would deal with a similar scenario...if they don't do the same, consider changing banks.
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#302869 - 04/22/10 03:59 PM Re: Can anyone with banking experience explain this? [Re: Adrian]
grunt Offline
connoisseur

Registered: 12/04/06
Posts: 3569
Loc: Nirvana
This explains how long banks can hold up your funds.

http://www.federalreserve.gov/pubs/regcc/regcc.htm#delay

I bank with USAA and have seldom noticed a hold of more than a day or two and usually none.
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#302879 - 04/22/10 04:40 PM Re: Can anyone with banking experience explain this? [Re: grunt]
jakewash Offline
shareholder in the making

Registered: 12/26/03
Posts: 10398
Loc: Calgary, Alberta
According to Wiki:

Cashier's cheques & banker's drafts
Cashier's cheques and banker's drafts are cheques issued against the funds of a financial institution rather than an individual account holder, decreasing the likelihood the cheque will bounce. Typically, cashier's cheques are used in the USA and banker's drafts are used in the UK. Though similar, they differ in their mechanics.

Cashier's cheques are issued by a bank cashier or head teller (or even by a major company). They are paid from the financial institution's funds immediately, without any clearing period. The financial institution then later takes the value of the cheque from the drawer. Cashier's cheques are perceived to be as good as cash but they are still a cheque, a misconception often exploited by scam artists.

The funds behind a banker's draft are paid when the draft is first drawn and are held by the issuing bank until the draft is cashed. Thus the funds of a banker's draft has been allocated and verified before the document is issued, providing a guarantee it will not be dishonoured due to insufficient funds. However, a lost or stolen banker's draft can be stopped like any other cheque so payment is not completely guaranteed.

[edit] Certified cheque
When a certified cheque is drawn, the bank operating the account verifies there are currently sufficient funds in the drawer's account to honour the cheque. A hole is punched through the MICR numbers so the certified cheque will not be processed as an ordinary cheque when it is deposited, and a bank official signs the cheque face to indicate it is certified. Although the face of the cheque is crowded, the back of the cheque is blank and the cheque can be deposited and routed through the banking system like an ordinary cheque.

While certified cheques guarantee there are sufficient funds to honour them at the time the cheque is drawn, they cannot guarantee there will be sufficient funds when the cheque is finally cleared for payment.


Link: http://en.wikipedia.org/wiki/Cheque
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#302899 - 04/22/10 06:24 PM Re: Can anyone with banking experience explain this? [Re: grunt]
htnut
Unregistered


 Originally Posted By: grunt
This explains how long banks can hold up your funds.

http://www.federalreserve.gov/pubs/regcc/regcc.htm#delay

I bank with USAA and have seldom noticed a hold of more than a day or two and usually none.


Guess they hold them longer in Canada.

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#302900 - 04/22/10 06:27 PM Re: Can anyone with banking experience explain this? [Re: jakewash]
htnut
Unregistered


 Originally Posted By: jakewash
According to Wiki:

Cashier's cheques & banker's drafts
Cashier's cheques and banker's drafts are cheques issued against the funds of a financial institution rather than an individual account holder, decreasing the likelihood the cheque will bounce. Typically, cashier's cheques are used in the USA and banker's drafts are used in the UK. Though similar, they differ in their mechanics.

Cashier's cheques are issued by a bank cashier or head teller (or even by a major company). They are paid from the financial institution's funds immediately, without any clearing period. The financial institution then later takes the value of the cheque from the drawer. Cashier's cheques are perceived to be as good as cash but they are still a cheque, a misconception often exploited by scam artists.

The funds behind a banker's draft are paid when the draft is first drawn and are held by the issuing bank until the draft is cashed. Thus the funds of a banker's draft has been allocated and verified before the document is issued, providing a guarantee it will not be dishonoured due to insufficient funds. However, a lost or stolen banker's draft can be stopped like any other cheque so payment is not completely guaranteed.

[edit] Certified cheque
When a certified cheque is drawn, the bank operating the account verifies there are currently sufficient funds in the drawer's account to honour the cheque. A hole is punched through the MICR numbers so the certified cheque will not be processed as an ordinary cheque when it is deposited, and a bank official signs the cheque face to indicate it is certified. Although the face of the cheque is crowded, the back of the cheque is blank and the cheque can be deposited and routed through the banking system like an ordinary cheque.

While certified cheques guarantee there are sufficient funds to honour them at the time the cheque is drawn, they cannot guarantee there will be sufficient funds when the cheque is finally cleared for payment.


Link: http://en.wikipedia.org/wiki/Cheque


Despite all of this they are still held for the same time period as a regular cheque, which seems pointless.

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#302938 - 04/23/10 12:32 AM Re: Can anyone with banking experience explain this? [Re: ]
grunt Offline
connoisseur

Registered: 12/04/06
Posts: 3569
Loc: Nirvana
 Originally Posted By: htnut

Guess they hold them longer in Canada.


Oops my slightly English educated brain didn’t catch your spelling, funny because that one I usually do spell the American way.
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#303031 - 04/23/10 05:57 PM Re: Can anyone with banking experience explain this? [Re: ]
PeterChenoweth Offline
connoisseur

Registered: 10/23/03
Posts: 1349
Loc: Jacksonville, IL
Back in the late 90's, for a couple of years I worked as a Teller & CSR for a major regional bank to help pay for beer, books, and pizza in college. From that experience...

If they're holding up your checks and not giving you a good reason, it could be that the bank is suspicious of either the check-writer or you. Could be because it's an out-of-state check. Could be because there's history on the account. Could be because the Teller who's cashing/depositing it for you got in trouble for cashing a bad check three weeks ago and is now super-cautious because they might lose their job. I've seen examples of all.

We were aware of certain people or businesses who would regularly write NSF checks. When we'd get those checks, we'd often put hard-holds on them knowing that there was a better-than-average chance they'd be bad. This was an attempt to offer some protection to both the bank and our customers. I could tell you many stories where some innocent customer received a bad check, depostited said check, then proceeded to write their own checks all weekend against that money, only to find out on Monday that the deposited check was bad, their account is now overdrawn, the checks *they* wrote in good faith are now bad, and they're now hit with hundreds of dollars worth of fees. It can be a disaster.

And yes, banks charge fees because they can. Or at least they think they can. If your bank nickle-and-dimes you to death with fees, find a new bank. There are plenty of banks out there that treat their customers fairly. I use a local bank where all of the normal sort of account activites are free. No balance limits, no fees on checks, debit cards, etc. Yet I know people who bank where there's a $.25 charge per debit card transaction, or a $5 monthly "account maintenance" fee, or a $2 ATM fee (even on the bank's own ATM's), or a you-wrote-more-than-5-checks-this-month-fee, etc. It's stupid to bank at a place that does that.

Placing a hold on a certified check is weird, but it can happen. Banks are supposed to trust eachother on certified checks but sometimes they do not. Could be that your bank isn't familiar with the other bank. Or it could be that the other bank is worried about fraud and requires your bank to put a hard hold on it until it's verified.

The questions the Teller asked you seem strange. It could be that the Teller was new to the job and was confused as to what was going on. When in doubt, always ask to speak to a supervisor. If you question why they're holding your funds (and you have a right to question it), ask to speak to a supervisor or the branch manager. Get an answer. Especially if you're an account-holder at the branch, you deserve to know why they're holding *your* money. But if you're *not* a customer of that bank, understand they they likely won't (indeed, can't) tell you anything.

Everything here applies to my experience with the US banking system. I have no idea how it applies to the canadian (or any other country's) banking system.

If you want the funds for a check *now*, cash it at the issuing bank. If it's a cashier's check from "First National Bank of Axiom", go to a "FNBoA" branch and cash it. It's their account, they'll know instantly if it's good. Then take the cash to your bank. The only exception to this is (in the US) if it's for more than $3,000. If it's more than $3,000, be aware that the bank submits info about the transaction to the IRS. And if it's more than $10,000 in cash, you will have IRS paperwork to fill out. At least those were the limits/rules when I worked at a bank.

Never take more than $2,999.99 in cash to a US bank if you don't want the IRS to (easily) know about it. ;\)
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#303043 - 04/23/10 07:06 PM Re: Can anyone with banking experience explain this? [Re: PeterChenoweth]
bridgman Offline
axiomite

Registered: 08/25/04
Posts: 5415
Loc: Bowmanville, Ontario, Canada
I have run into this in Canada as well on a couple of occasions. Both times I spoke to the manager - turns out that the incidence of forged certified cheques and bank drafts had gone through the roof (at least in the area I live) and they didn't yet have a good solution for dealing with the forgeries.

My assumption until then had been that they would simply go back to whoever deposited the cheque and remove the funds from their account, but there seemed to have been a lot of bad experiences tracking down account owners as well (since the balance in the account was usually near zero by the time the forgery was detected). I pointed out that I had an RSP and a couple of mortgages at the bank, but reading between the lines it seemed that people with apparently solid banking history were frequently involved in these scams, as they were basically looking to collect as much cash as possible before skipping town on the house, the mortgage, and the other accounts.

Apparently it's a lot harder to make a claim against an RSP than I thought. Not sure why that is.

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#303115 - 04/24/10 12:09 PM Re: Can anyone with banking experience explain this? [Re: PeterChenoweth]
htnut
Unregistered


Wow, thanks for the great info Peter. That all makes sense. I wouldn't personally even accept a cheque if I didn't trust/know the writer, so I don't blame the banks. I was just surprised they didn't trust the certified bank draft, epsecially since I've been an account holder there for 15 years. Oh well, maybe time to look for a friendlier bank.

 Originally Posted By: PeterChenoweth
Back in the late 90's, for a couple of years I worked as a Teller & CSR for a major regional bank to help pay for beer, books, and pizza in college. From that experience...

If they're holding up your checks and not giving you a good reason, it could be that the bank is suspicious of either the check-writer or you. Could be because it's an out-of-state check. Could be because there's history on the account. Could be because the Teller who's cashing/depositing it for you got in trouble for cashing a bad check three weeks ago and is now super-cautious because they might lose their job. I've seen examples of all.

We were aware of certain people or businesses who would regularly write NSF checks. When we'd get those checks, we'd often put hard-holds on them knowing that there was a better-than-average chance they'd be bad. This was an attempt to offer some protection to both the bank and our customers. I could tell you many stories where some innocent customer received a bad check, depostited said check, then proceeded to write their own checks all weekend against that money, only to find out on Monday that the deposited check was bad, their account is now overdrawn, the checks *they* wrote in good faith are now bad, and they're now hit with hundreds of dollars worth of fees. It can be a disaster.

And yes, banks charge fees because they can. Or at least they think they can. If your bank nickle-and-dimes you to death with fees, find a new bank. There are plenty of banks out there that treat their customers fairly. I use a local bank where all of the normal sort of account activites are free. No balance limits, no fees on checks, debit cards, etc. Yet I know people who bank where there's a $.25 charge per debit card transaction, or a $5 monthly "account maintenance" fee, or a $2 ATM fee (even on the bank's own ATM's), or a you-wrote-more-than-5-checks-this-month-fee, etc. It's stupid to bank at a place that does that.

Placing a hold on a certified check is weird, but it can happen. Banks are supposed to trust eachother on certified checks but sometimes they do not. Could be that your bank isn't familiar with the other bank. Or it could be that the other bank is worried about fraud and requires your bank to put a hard hold on it until it's verified.

The questions the Teller asked you seem strange. It could be that the Teller was new to the job and was confused as to what was going on. When in doubt, always ask to speak to a supervisor. If you question why they're holding your funds (and you have a right to question it), ask to speak to a supervisor or the branch manager. Get an answer. Especially if you're an account-holder at the branch, you deserve to know why they're holding *your* money. But if you're *not* a customer of that bank, understand they they likely won't (indeed, can't) tell you anything.

Everything here applies to my experience with the US banking system. I have no idea how it applies to the canadian (or any other country's) banking system.

If you want the funds for a check *now*, cash it at the issuing bank. If it's a cashier's check from "First National Bank of Axiom", go to a "FNBoA" branch and cash it. It's their account, they'll know instantly if it's good. Then take the cash to your bank. The only exception to this is (in the US) if it's for more than $3,000. If it's more than $3,000, be aware that the bank submits info about the transaction to the IRS. And if it's more than $10,000 in cash, you will have IRS paperwork to fill out. At least those were the limits/rules when I worked at a bank.

Never take more than $2,999.99 in cash to a US bank if you don't want the IRS to (easily) know about it. ;\)


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