What are Cleared Funds?

Malcolm Tatum
Malcolm Tatum

Cleared funds are usually identified as cash, checks or other financial instruments that have been deposited into a bank or investment account, and have been cleared for usage by the institution. Depending on the regulations the govern deposits with the jurisdiction, as well as the standard practices of the financial institution, the deposited funds may be immediately available to the account owner, or be held in a pending mode for a specified matter of time. Financial institutions are responsible for following federal guidelines regarding the availability of deposits, and develop their internal procedures related to cleared funds in a manner that complies with federal regulations.

Banks may require three to five business days to make funds available for withdrawal.
Banks may require three to five business days to make funds available for withdrawal.

With many banks today, cash and checks written under a certain amount are recorded first as a credit memo to the account. This effectively helps the internal system keep track of postings that will shortly be applied to a given account. If the customer makes a deposit before a set time of day, the credit memo is issued and dated with the same calendar date and is cleared sometime during the evening hours. This means the cleared funds will be available the following business day.

Generally, many banks today require that deposits be made before one or two o’clock in the afternoon, in order to be recorded and cleared on the same day. Any deposits made later in the afternoon will be dated as occurring the following business day and cleared for use the evening of that date. This will mean that a deposit made around three p.m. on Monday will not be available for use by the customer until Wednesday morning. Understanding the bank’s policy on cleared funds is essential to preventing problems arising with the account.

Banks may require three to five business days to make funds available for withdrawal. This is often the case when a check is issued on a bank outside the country, or if other extenuating circumstances occur that delay the bank from confirming the worth of the financial instrument. With some banks, checks for large amounts of money that are drawn on non-business accounts will also fall into this three to five day clearance range. Cleared funds are made available only when the bank has confirmation that the check will be honored. Delays of this type can often be avoided by making use of electronic transfers, which move funds directly from the bank account of the payer to the designated account of the payee. Often, these funds are available immediately, or at least later the same day.

Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including wiseGEEK, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

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Discussion Comments


@DylanB – It might be that you do have access to your deposited money the next day. Banks operate differently, and mine does have a policy that funds deposited after two o'clock will be available the very next day, so you should double check with a bank representative.

If you are ever unsure of whether or not your funds have cleared and the bank is closed, you can always go to the ATM. It can tell you how much money is in your account if you just swipe your card and request your account balance.

That's what I have to do on weekends sometimes. If my balance shows funds that were not in there on Friday, I know it is safe to use them.


If you open an online bank account, you will be able to monitor whether or not your funds have cleared. This is what I did, because I wanted to be able to check my account at any time.

If the money has not been cleared yet, it will show up as a pending transaction. So, if this happens, I know not to spend it, because I really don't have it yet.

I think this is the best way for people like me who don't have a lot of money to keep track of their funds. Sometimes, I have under $100 in my account, and this could create real problems for me.


This article talks about the reason why I operate from cash funds only. With banks, there is just too much red tape.

I don't like being told that I can't use my own money until they are ready to let me. I just don't trust them. What if the bank failed overnight and I lost all that money?

So, I think it is best to put my money in a fireproof lock box. The one I have is really heavy and awkward, so it would be hard for thieves to steal. Many people think I'm insane for putting all my money in one spot like this, but to me, it is the only way I have full control over it.


Wow! I knew that my bank had a policy that funds deposited after 2 in the afternoon would not be posted that day, but I thought that this meant that I would have access to them the very next day.

It's a good thing that I had enough money in my account to cover the things I went out and bought immediately after depositing this money! Otherwise, I would have been in trouble with my bank.

I wish that things were different, but I understand that the bank has to verify checks. They have to be sure that they are real and are backed by actual money.


@LoriCharlie - Another thing you can do is just cash your check if you need the money right away. Then you can get a money order and pay a bill or deposit your cash into your bank account. Most banks make cash deposits available for use as account funds right away.

The only downside to this is that it's kind of a hassle. You have to take your check somewhere to cash it, then take a trip to the bank or to get a money order. Also, most places charge a fee to cash a check, so you're definitely paying for the convenience.


@eidetic - It does seem fairly arbitrary when funds clear, but I'm assuming every bank has to follow the federal laws, so your bank must be well within their rights to do it the way they do. That doesn't mean it's convenient though!

I personally hate waiting for funds to clear. It seems ridiculous, because the money is in there, but you can't use it! I personally have solved this problem by getting direct deposit at my job, because the funds are available right away. I like that way better than having to wait a few days for a check to clear.


I had no idea there were any kind of federal regulations about when funds are supposed to clear. To be honest, I feel like banks kind of just make it up as they go along!

For instance, my bank has different rules for when funds clear if they're a check from in state, out of state, a check from a different bank, etc. In fact, when I first opened my account it took 9 days for my first three payroll checks to clear. Like I said, it seems like they just got that number out of a hat or something!

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