Banks Slow to Credit Checks, Survey Finds

More than half of all banks delay crediting local checks to their depositors’ accounts for three to five days, a Washington consumer group said today.

The U.S. Public Interest Research Group said its survey of 669 banks across the nation found that 52% place holds on local checks, and 75% hold out-of-state checks for more than a week.

“While banks and savings and loans are earning market interest rates on funds deposited by check, consumers are subjected to indefensible delays in gaining access to their own money,” charged Mike Caudell-Feagan, author of the report.

Gene Karpinski, executive director of the group, termed the delays unfair and said “no legitimate reason exists for these lengthy check hold policies.”

He cited Federal Reserve studies showing that 99% of all deposited checks are collected by the banks within one or two days.

Banks defend their policy of holding checks by pointing to the possibility of bad checks.

But Karpinski said less than 1% of all checks are returned and only one in every 5,245 checks goes uncollected by banks.

Caudell-Feagan noted that some banks hold out-of-state checks for as long as two weeks, and some even place holds on cashier’s checks.