Same-Day Funds
Table of Contents What Are Same-Day Funds? Understanding Same-Day Funds Availability of Funds Special Considerations Fedwire Funds Service Clearing House Interbank Payments System The term "same-day funds" refers to money that can be transferred or withdrawn the same day it is deposited into the recipient's bank account. According to Regulation CC, the following deposits are available to customers on the first business day after the banking day of deposit (also known as next-day availability): Cash deposits Direct deposits Wire transfers Transfers from other accounts at the same bank Deposits made through the Automated Clearing House (ACH) Checks from the U.S. Treasury Government checks Certified or cashier's checks Money orders purchased from the U.S. Postal Service These deposits must be made in person at a bank or, in some cases, may be made at an automated teller machine (ATM) owned by the customer's bank, as long as the funds are posted to the account before the bank’s cut-off time for that day’s business operations. Same-day funds can also refer to money sent between banks via the Fedwire Funds Service or the Clearing House Interbank Payments System (CHIPS). Most banks make funds deposited by customers available within one to two business days. Cash deposits, direct deposits, wire transfers, and government checks are types of deposits that are usually available to customers the first business day following the banking day of deposit. Many customer deposits are not same-day funds and customers must wait one to two business days to access the funds.
What Are Same-Day Funds?
The term "same-day funds" refers to money that can be transferred or withdrawn the same day it is deposited into the recipient's bank account. Same-day funds are subject to the net settlement of accounts between the banks that present and remit the funds. Many customer deposits are not same-day funds and are not available for withdrawal for one to two business days.
Understanding Same-Day Funds
Most banks make funds deposited by customers available within one to two business days. Business days are Monday to Friday, with the exception of federal holidays. This does not include Saturdays and Sundays, even if banks are open and accept deposits on these days.
Banks and other financial institutions that accept customer deposits must adhere to the Federal Reserve Board's (FRB's) Regulation CC. This rule enforces disclosures about hold policies and the availability of funds. Put simply, it states what deposits customers have access to per the Expedited Funds Availability Act (EFAA) passed by Congress in 1987.
According to Regulation CC, banks are required to provide customers with fund availability disclosure statements before customers open a new account and 30 days before terms on an existing account are changed.
Availability of Funds
According to Regulation CC, the following deposits are available to customers on the first business day after the banking day of deposit (also known as next-day availability):
These deposits must be made in person at a bank or, in some cases, may be made at an automated teller machine (ATM) owned by the customer's bank, as long as the funds are posted to the account before the bank’s cut-off time for that day’s business operations. This is usually sometime in the mid-afternoon.
The majority of deposits aren't immediately available to customers because they need time to clear. For instance, when a customer deposits a check into their bank account, the bank may put it on hold for a number of days. This allows the check to be verified and cleared so it doesn't bounce. Once the check is cleared, the hold is removed and the funds become available to the depositing customer.
Special Considerations
Regulation CC also has conditions regarding when financial institutions can delay the availability of deposited funds. These conditions are called "exception holds" and include:
Fedwire Funds Service
Same-day funds can also refer to federal funds that are sent via bank wire. This money would be sent between banks via the Fedwire Funds Service the same day. This service allows for immediate, irrevocable, and final real-time funds transfers. It’s available to businesses, financial institutions, and depository institutions that have an account with the Federal Reserve Bank.
The Fedwire Funds Service is typically used to make large, time-sensitive payments. Funds are debited from an originator’s account and credited to the account of another participant in the Fedwire Funds Service. Fund transfers can be initiated via telephone or online.
Clearing House Interbank Payments System
Clearing House Interbank Payments System (CHIPS) transfers in New York are also known as same-day funds. CHIPS is a privately owned clearinghouse for handling large transactions. Transferring money via CHIPS costs less than transferring it via Fedwire, so banks typically prefer to use this service to transfer less time-sensitive payments.
While Fedwire is a real-time gross settlement system, payments made via CHIPS can be netted. This means that payments are not made in real-time. CHIPS has approximately 50 direct participants and settles $1.8 trillion in domestic and international payments every day.
Related terms:
Account Hold
Account hold is a restriction on the account owner's ability to access funds in the account due to various reasons. read more
Automated Clearing House (ACH)
The Automated Clearing House Network (ACH) is an electronic funds-transfer system run by NACHA, formerly the National Automated Clearing House Association. read more
Automated Teller Machine (ATM)
An automated teller machine is an electronic banking outlet for completing basic transactions without the aid of a branch representative or teller. read more
Bank Wire
A bank wire is an electronic message system, which allows major banks to communicate various actions or occurrences regarding client accounts. read more
Bounced Check
A bounced check is slang for a check that cannot be processed because the writer has insufficient funds. read more
Business Day
A business day is a popular unit of time measure that typically refers to any day in which normal business operations are conducted. read more
Checking Account
A checking account is a deposit account held at a financial institution that allows deposits and withdrawals. Checking accounts are very liquid and can be accessed using checks, automated teller machines, and electronic debits, among other methods. read more
Clearing House Funds
Clearing house funds are monies that pass between Federal Reserve banks in the form of personal or business checks prior to approval of credit. read more
Introduction to the Clearing House Interbank Payments System (CHIPS)
The Clearing House Interbank Payments System is the main venue where large banking transactions are cleared in the U.S. read more
Clearinghouse
A clearinghouse or clearing division is an intermediary that validates and finalizes transactions between buyers and sellers in a financial market. read more