How to Remove a Hold on a Bank Account?

hold on a bank account

Banks holds are like a security system that, when triggered, implement protective measures to protect the bank and its customers. While there are instances when a hold is placed on your bank for genuine reasons, you may be the victim of needless bank account holds. In that case, you’ll be looking forward to when the bank will remove the hold. Alternatively, you can decide to take action to remove the hold. And what actions are we referring to?

Account hold is usually placed for several reasons. To remove one from your bank account, follow these steps: reach out to the bank, fix the issue, open a new account with another bank.

Did your bank place a hold on your bank for reasons unknown to you? Do you even know what an account hold is and why it is a potent weapon in the bank’s arsenal? If a bank places a hold on your bank, what do you do to remove it? I have answered these questions below.

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How to Remove a Hold on a Bank Account?

First off, let’s look at what an account hold is. Later we’ll look at effective steps to remove it.

What Is an Account Hold?

You must have heard of an account hold or restriction, but do you know what it means? Account hold is a limitation on an account owner’s ability to access money in the account due to many reasons.

When a bank or financial institution places an account on hold, it usually does so to protect itself from potential loss, but it may also take such action to protect the customer. For example, a bank may put a hold on an account if they discover a strange activity that may be because of suspected fraud or identity theft.

An account hold may last a day or two, but it could last for a long time depending on the reason behind the restriction. In longer instances, an account hold may be regarded as an account freeze.

Account Hold: Overview

There are many reasons why a bank may place your account on hold. A deposit of a certain large check, an outdated check, or a foreign check may cause an account to be restricted, though the hold would be limited to the check amount. The customer would have to wait for the check to clear before accessing the money. Worthy of note is that, new accounts are typically subjected to holds or entire initial deposits. There would be an account hold if funds were promised as collateral for a loan.

An order by a court or a Federal or state tax authority would also lead to a hold. If the bank needs to investigate a strange activity in an account, it may choose to exercise its right to lock the customer’s use of funds temporally. If a customer reports being a victim of identity theft, the bank will ensure that the account can’t be accessed to protect the customer.

For example, a sudden and suspicious huge withdrawal or transfer to a foreign account may signify that an account has been hacked. Accounts may also be placed on hold if the owner dies and an heir or administrator to the deceased’s estate is yet to be designated. Finally, if an individual is discovered to be associated with certain crimes, their account may be restricted.

How an Account Hold Affects Customers?

Because your money has been transferred to a restricted account, the biggest problem is settling your bills. Many people have their checking account linked with the bills they pay and allow the money to be removed automatically every month.

If you encounter issues, your bill pay feature will probably be affected, leading to bounced checks and a domino effect of problems that can be hard to take care of.

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Here are a few steps to take when a bank places a hold on your account:

  1. Reach out to the bank:

Reach out to the bank and find out why a hold was placed on your account. Banks have to adhere to the government’s rules on how to hold check deposits. If it’s a matter of following the law, there isn’t much you can do. However, if the hold was placed for another reason, like collateral for a loan, it can be removed, provided you meet the bank’s conditions.

Call your bank and ask how long it’ll take for the hold to be released as soon as you adhere to the bank’s terms. You should know if the money will be available pronto or if you’ll wait, particularly if you need the money for something urgent.

  1. Fix the issue:

Take the necessary steps to meet the bank’s requirements. For example, if the hold is securing a loan, pay the loan in full to get the money released. If the bank stopped the check for suspicious activity, provide documentation to show that its source and use are legit.

Follow up with the bank to confirm that the hold has been released and the funds are available. If the hold remains, ask to speak with a manager. Find out if you missed some steps in complying with the bank’s rules. If so, address them as soon as possible. If you’ve done everything that’s required, the manager should release the hold immediately.

  1. Open a new account with another bank:

While some holds are authorized by federal law, others are due to bank rules. Under the 1987 Expedited Funds Availability Act, the government stated requirements for banks to lessen hold times. For example, Treasury and cashier’s checks should be available the following business day, but local checks should be available within two business days. Nonlocal checks have five days to clear.

If you observe that your bank is fond of putting strict holds on your account it’s best to start searching for a bank with policies that are favourable to you. Just be aware that often banks put these measures in place to protect themselves and their account holders, so you may be giving up on an essential security feature that may benefit you.

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