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A bank account contains funds that have been deposited in a bank and are linked to a specific account holder, and it may be a checking account, a savings account, a money market account, or a time deposit account. The funds in the account are funds that have been credited to the account holder and are subject to withdrawal by the account holder, who is sometimes, but not always, the depositor. For example, the account holder may not be the depositor in cases of direct deposit by his or her place of work, or a wire transfer. An account hold is a limitation placed on the use of funds deposited to the account. Other industries that offer a line of credit may use the term account hold to refer to accounts from which orders will not be taken until moneys that are owing have been collected.
An account hold is a restriction that can be placed on all or a portion of the funds in a bank account. The account hold limits the access that the account holder has to the funds, often for a short period of time, sometimes for longer. There are several situations that can result in an account hold.
There are several situations in which an entire account can be placed on hold. This may happen in the event that the account is pledged as collateral for a loan. An account hold on an entire account or even on all of a person’s accounts can occur if a lien has been placed on the accounts by a local or national tax authority or by a court order. Other reasons for a hold on an entire account include suspicion on the part of banking officials that identity theft has taken place or that a transaction violates anti-money laundering regulations. Another reason is if the bank officials have reason to believe that the funds cannot be collected.
A more usual kind of hold, which only affects a portion of an account, is the type of account hold known as a check hold. This is normally a hold of several days’ duration while a check deposited to an account goes through the bank’s clearing cycle. Funds are often available the second day after deposit when the bank being drawn on is local, but it takes longer if it is nonlocal but within the country. In the event of a foreign bank being involved, the account hold may be longer still.