WaMu Holds Large Deposits For 2 Weeks, Doesn't Warn You First

How long should a bank be allowed to hold your money to “verify” it? A week? 5 days? 2 weeks?

Paul and his wife are buying their first home and, as a result, are making some large transactions between their various financial institutions. Paul writes:

My wife and I were in the process of buying our first home. Our escrow was to close on February 9th, and our loan people wanted our down payment to show up in escrow on February 7th. We had money spread around in a few financial institutions, so we started early to gather the money in our WAMU joint checking account to wire the down payment to escrow. On Monday, January 29th I went to a WAMU branch to deposit a check for $49,900 which was from my Schwab account. This was 7 business days before I needed to wire the money. I saw a sign at the “teller window” that said they may hold checks up to 5 days to verify the funds. I asked the “teller” before I gave him the check when he thought the funds would be available, and he said “The receipt will tell you.” I didn’t really like that answer, but I figured it wouldn’t be longer than 5 days.

It was much longer than 5 days. Read the rest of Paul’s email inside.

Paul continues:

I gave him the check, he deposited it, and then he gave me the receipt. As I walked away and read the receipt it told me that $100 was available now, $4,900 would be available on February 3rd (5 days), and the remaining $44,900 would be available on February 13th, over two weeks after the deposit, and well after our escrow was to close. This was not good.

I talked to the manager who was more helpful than the kid at the teller window, but he said since the check was so large compared to what we kept in the account they had to hold it. I understood that we don’t keep much in that account (trying to keep cash in high yield savings accounts) and understood the check wouldn’t be available right away. However I thought as soon as the money cleared Schwab, the money should be available for us. He said to come back in a couple of days and he’d see what he could do.

So I ended up hounding Schwab to see when it cleared that account. Once it did, on Wednesday January 31st, I called the WAMU manager and gave him the name and number of who I talked to at Schwab. He then called them and then called me back and said he manually released the hold on our funds. So it ended up working out, after some panic and diligent following up. However if I hadn’t had the manager manually release the funds I’m afraid they would have been sitting on the bulk of my money for two weeks. Needless to say, we didn’t move any of our other money into WAMU. Instead we moved the rest of our down payment funds into a local account we have (Santa Barbara Bank and Trust) where the teller actually checked with her manger BEFORE depositing the check. She told me 2-3 days to clear and sure enough it was available in two days.

We’ve since closed our accounts at WAMU and moved all of our cash to the local bank.

For all their nice “customer friendly” advertising, we’ve been getting a heck of a lot of complaints about WaMu lately. What’s up with them? Growing too fast for their own good? —MEGHANN MARCO

wamuhold.jpg

Comments

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  1. Bye says:

    This is precisely one of the reasons we abandoned WaMu (or WhamYou, as we now like to call them) a mere couple of months after giving them a large part of our business four years ago.

  2. defectiveburger says:

    This is common at any bank. If you have a large deposit, they will hold the funds until they can be sure that the deposit will be good. Don’t take offense, don’t take it as WaMu holding your money hostage, this would’ve happened anywhere and it’s a pretty standard deposit hold.

  3. The teller should have been able to give him a current disclosure for his account which should have a Funds Availability section in it. There’s no reason they should have had to wait until after the deposit to find out how soon they could use the money.

  4. cindel says:

    I still want that T-shirt!

  5. bluebuilder says:

    I have had banks hold it for 20 business days. Not uncommon, he should be happy with only 7. And I have an excellent history with my bank.

  6. thisiskspraydad says:

    So…the bank went above and beyond by contacting the other institution and manually releasing the hold..what’s the complaint?

    Next time get your check certified or ask for a draft/coporate order … THAT IS WHY THEY EXIST.

  7. Buran says:

    @Rectilinear Propagation:

    Apparently it isn’t, as the OP describes a local bank that did a MUCH better job with this than the incompetent WaMu branch did.

  8. Mark says:

    I’m with BoA and they do this for any deposit over $2,000 as has been my experience.

    I too recently bought my first home, but was wise enough to consolidate everything at my investment houses and have then wire the $$ directly to the escrow account.

  9. RapperMC says:

    @defectiveburger: “this would’ve happened anywhere” except the local bank where it did NOT happen. the charge that they are growing too large for their own good is the key here. at some point, they have sacrificed their quality customer service for easier, more shippable customer service, and this has yielded a “the customers are cattle herds” mentality.

  10. He says:

    Having just gone through homebuying myself, I gotta say one of the best pieces of advice I didn’t get was to liquidate/consolidate funds 2-3 weeks in advance even if you’re still haggling. I waited until a week before closing (because there were disputes about the contract until then) before moving any money and just barely got my down payment together on the closing day.

  11. dwarf74 says:

    I had the same issue at my bank (Commerce). Honestly, I can’t fault them for a policy like this. While most of the time, a bank will know within 5 days if a check is good, sometimes it can take up to 2 weeks.

    I didn’t mind and I was prepared. I mean, I was depositing a check for $27,000 from an inheritance… No other check deposits I’d ever made came even close to that. I can’t fault them for looking out for their customers’ (including my) financial well-being.

    If you ask me, this is a silly thing to bring a company to task over.

  12. manevitch says:

    I ran into the same problem with Bank of America several years ago – I deposited a cashier’s check from the sale of my previous home, and a week later I tried to withdraw the funds and was told they were still unavailable. I convinced the manager to release the funds, otherwise the closing on my new home would have been delayed.

    The lesson here, I guess, is to transfer the funds in such a way that there is no waiting period for “verification” – namely, a wire transfer.

  13. timmus says:

    Why does anyone bank at WaMu when there are better banks out there?

    I got sick of bad service at BoA about 5 years ago and went with a regional bank with real humans (no call center) and have gotten nothing but fabulous service. Our Visa check card number got stolen a few days ago and used for 5 transactions in Asia totalling $300. They cancelled the card and put all the money right bank in our account the next day.

    And for what it’s worth, the whole ACH system sucks. Doesn’t Europe do it better? Why is it I can deposit a check with my bank only to find 5 days later it’s bounced?

  14. WRXtacy says:

    Like defectiveburger stated above, this is common practice at many banks. As a former banking employee I can definitely verify this. This shouldn’t be seen as a WaMu only issue. Banks are heavily regulated and any large deposit is scrutinized in fear of money laundering or other criminal activity. I wouldn’t hold this against WaMu as it seems that the manager did explain the situation and do what he promised. You can hate them for other reasons… again quoting from comments above.. this is what certified/cashiers checks are for.

  15. watersketch says:

    As commenters have said, this can happen a lot. The key is to talk to a manager and find out exactly when the check will clear. If they say 10 days, ask them if it can be done earlier. Oftentimes, this simply requires a manager’s signature.

    If you have been a long-time customer at this bank, you should absolutely ask for better service. And if they can’t give it to you, take your business to someone who can.

    And finally, don’t think that just because the bank is really big that you can’t ask the person who works there for better service. You can and you should.

  16. not_seth_brundle says:

    @timmus: “Why does anyone bank at WaMu when there are better banks out there?”

    For me, it’s for the 5% savings account coupled with the convenience of brick-and-mortar branches. I haven’t had any problems with WaMu in the 3 years I’ve been banking with them. Then again, I haven’t had my wallet stolen or had any other types of issues requiring real customer service.

  17. Chairman-Meow says:

    Isn’t it amazing that Banks can process checks in less than 24hrs but for some reason cannot cash large checks in a simular time frame ?

  18. JohnMc says:

    A minor suggestion that is available by some title/closing companies. As the buyer or the seller you can make arrangements to have a closing escrow account set up in your name or closing. You can then have the mulitple account wired to the account. It costs a few bucks but it eases the closing process. Title companies are very adept at making sure financial institutions get the deposits clearned since the do it so often.

  19. tenofdiamonds says:

    Just because it’s “common” doesn’ t make it right. My husband and I ran into the same problem with WAMU when we got married. They held our gift checks for a large amount of time, and it was often almost random how long that amount of time was. Even if that is supposedly the standard for US banks, it’s still semi-ridiculous and completely frustrating.

    (On a side note, it was actually not the check holding that made me dump WAMU. It was the complete inability of theirs to get my name change correct after my wedding. A year and a half after the wedding, and after two trips to bring them my marriage license and multiple long calls in which they swore it was taken care of, they still sent me my third incorrect ATM card. I gave up.)

  20. bluebuilder says:

    You know, I don’t know if this has been suggested, but it might be interesting to run a poll on here regarding the best banks to work with.

    I personally use Wells Fargo and haven’t had any problems, but I know some have switched to ING Direct with great success.

  21. Chaluapman says:

    I bank at Wamu, and have been a customer for a few years now. I have not experienced any poor customer service or anything out of the ordinary. The grass is always greener on the other side. I am a happy WAMU customer.

  22. Chaluapman says:

    Here is a good article from bankrate.com on bank holdups.

    http://www.bankrate.com/brm/news/chk/19991102.asp

  23. mac-phisto says:

    wamu actually went above & beyond (with the manual release) in this case. their policy is actually the standard funds availability as handed down by the federal reserve (the “infamous” regulation cc).

    http://www.federalreserve.gov/Pubs/regcc/regcc.htm

    the unfortunate fact of check collection is that the depositing institution doesn’t receive a receipt when the item clears – only when it doesn’t, which can actually take more than two weeks in cases of fraud.

    if we really want to get into it, let’s talk about how some banks are holding direct deposits, government checks & cash as long as a week. those policies are in direct violation of reg cc.

  24. kerry says:

    I was worried Chase would do this to me with two large deposits last summer(one for $75,000 and another for $45,000) but both cleared overnight. I had everything timed out for a 5 business day turnaround, all worried that they would screw me and wait two weeks, and they didn’t wait at all either time. I had even called their customer support line to ask what the maximum amount of time they could hold a check was, and the lady wouldn’t give me a hard number. She also wouldn’t tell me what factors affect the speed of the deposit clearing, that conversation was overall useless. I was the first in line to hate Chase when they took over BankOne, but they’ve yet to do anything unfriendly with me. Maybe I’m just lucky?

  25. bastarre says:

    Compass bank pulled this BS on me when I deposited $25k for a car I sold. No disclosure until AFTER they marked the check all up as deposited, etc. I talked to the regional manager, the bank who issued the check called Compass, faxed ‘em twice (which compass claims they didn’t get twice), etc. They held my money for 21 days. Hope they liked the interest they made off of my money cause the day it cleared, I went and closed the account and took my business elsewhere. Losers.

  26. Zain says:

    The reason the teller didn’t inform the customer before is that checks are placed on hold by an automated system that Wamu uses. Their holds are pretty bad for new customers; they will hold even small checks for two weeks. After your account is more than one month old, however, they usually don’t hold checks and funds are available immediately even if the checks are in the thousands-of-dollars range. Contrast that with Wachovia, which in my experience always holds checks for 2-3 days.

  27. FlashSandbox says:

    Bank of America held a $9k deposit of mine for 12 days and after I called on day 10, they couldn’t figure out why it was held, just that it’d be in my account ‘soon’. They thing is they held the entire deposit, not just the large check that was flagged (I had a smaller paycheck in there too).

  28. BillyShears says:

    To echo sentiments already made, I don’t see how WaMu ultimately subverting their own policies to get this guy his money sooner rather than later is somehow a legitimate complaint. Holds like this are not uncommon, and they do generally vary from bank to bank. Kudos to him for moving to a bank that can probably verify large checks more quickly, but perhaps in the future learning about a bank’s policies on the matter beforehand would save him a ton of grief.

    Count me among the happy WaMu customers out there. I had zero issues transferring my account to a local branch when I moved across the country, got zero grief when I asked for a regular ATM card and not a check card (the clerk actually commented that it was a smart move and wished more people did it), and the company as a whole has been responsive to my few calls to customer service.

  29. jrsey says:

    I’ve seen a few people in line who were going to deposit what I assume are large amounts, cash the check at a tellers window (usually takes a few minutes as they like to “verify”)then walk to the back of the line, work their way back to the teller, and deposit the cash.

    I’ve never had to do it, but I imagine the funds are more readily available if you deposit cash.

  30. LAGirl says:

    i’ve been with WAMU for about 7 years and have been very happy. i think the key is to deal with one local branch. get to know the names of tellers and the manager. i did this and any time i have a problem, i can just stop by, or call, and they take care of me.

    i once had a very large check to deposit. was told the same thing, there would be a 2 week hold. i asked the manager if she could call and verify funds (it was drawn on a local bank). she did and the funds were released within a few days.

  31. mxmora says:

    The problem I have with this is the fact that they dole it out in small chunks unrelated to the fact the the check had already cleared. It’s one thing to hold a large check to make sure the other bank has time to verify the check is legit, but once that is done, release the funds already! Citibank does the same thing and it’s infuriating as hell.

    Always, always, have large amounts wired. How would you feel if you lost the check? You would have a hard time closing escrow then.

  32. tedyc03 says:

    They did this to me with a check I deposited for $2,000. I had written checks against the account already, but was told that they would have to hold the check for 5 days until it cleared. I ended up having to go to the bank it was drawn on, and then depositing the cash into my account (which posted immediately). I have since moved banks.

  33. zolielo says:

    @mac-phisto: I too was a bank regulator a few years back when I was first starting out in the job market. So I can say that those rules really do help the overall money and banking system.

    One tip that I would suggest is talking to the manager before depositing the significant check so that a manual release can be issued and the balancing of the bank’s systems can be more easily be done. Once the check is in the system it is a great deal more arduous to aid a customer.

  34. North of 49 says:

    Wells Fargo has been giving a friend of ours the run around. He has faxed them his information twice and they “haven’t received it.” He badly needs the business loan – his livelyhood depends on it – but his personal bank doesn’t believe he is who he is even though he has been doing his business transactions there for almost a decade now. So, not just Wells Fargo but HSBC as well has been giving this guy a run around.

  35. This sucks, but they should’ve known better. Nearly all banks place holds of this sort (if not this duration), and it’s as easy as asking to find out. The workaround is to wire the money. Yes, it costs a little, but the funds are instantly verified and available. Note that even certified/cashier’s checks are often subject to these sorts of holds unless they are issued by the same bank into which you’re depositing them.

  36. @fivecentnickel.com: Agreed, and I’m not sure a certified check would have been possible in this situation if Paul’s $49k deposit was from Schwab. A Schwab ain’t a bank. So they can’t issue a certified check, right?

  37. B says:

    Depositing large sums of money should draw red flags from a financial institution. By law, they have to verify that you are not a terrorist or on any of the “bad people” lists when you deposit or withdraw large sums of money. The threshholds are lower when you’re dealing with cash.

  38. marike says:

    I’ve been a happy Washington Mutual customer since they took over my old bank about 10 years ago. Occasionally, I’ll get an odd CS person or wonky teller when I visit the mainland, but nothing that I would consider complaining about here.

    I also have checking accounts at other banks and as reiterated already, holding checks like this is common practice and definitely not unusual. US Bank definitely holds large checks for up to 10 days, as does our local bank here on O’ahu. For small checks, it can take up to a week, but normally is 3 days.

    Paul and his wife got really lucky that WaMu bent the rules for him. I don’t see any real valid complaint here except that the teller they spoke to didn’t give them a concise answer. Not a huge deal imo. Seems like Paul is drumming up drama to jump on the WaMu bashin’ bandwagon. I don’t fault the Consumerist for publishing his complaint, but I think Paul definitely comes off as the dumb one here and the Consumerist blurb doesn’t reflect that WaMu went the extra mile to remedy the situation for him.

  39. Chongo says:

    I had the same problem with a citibank account and a small inheritance I got wired from my grandmothers bank. I need the money ASAP and there was going to be about a 3 week hold. I talked to the manager and they manually released it.

  40. VA_White says:

    I used to bank at Wells Fargo and I thought it was dumb dumb dumb that I could take a check to the window, cash it, then deposit the cash. The cash was immediately available but if I’d simply deposited the check, there would be a hold on the funds for over a week. The tellers there hated me but it’s MY money and I want it available immediately.

    I had a certified check from my grandmother’s estate and Wells Fargo wanted to put a hold on it because it was large and they weren’t sure it wasn’t a forgery. That’s the story they told me anyhow. I made them cash it instead then I deposited the cash later at another branch. Suck it, bank.

  41. sam-i-am says:

    Looks like they let $100 through. Is that all the liability they wanted to accept?

    Honestly though, a bank needs to protect it’s assets and make sure the funds are available. If they didn’t instances of fraud would go through the roof.

  42. SecureLocation says:

    Just because it’s a common practice don’t make it right. This is about the “float” on all the money that the bank holds days longer than neccessary. They make big bucks every day they have your mney and you don’t. In many cases, those funds clear long before they are released to you. Don’t forget: they’re not sending that check for approval by pony express.

  43. MonsieurBon says:

    When I deposited $60k for a down payment on a home into my WaMu checking account, it cleared right away. Why? I asked them to make sure it cleared right away. They scanned the check and said “yup, it all cleared!”

    Of course, then they forgot to sign the cashier’s check to give to the escrow people or whomever. So I had to leave the signing to get another, closer branch to sign it. Classy.

  44. loudguitars says:

    I actually got kind of pissed at WaMu when they held an $8k check I deposited for over two weeks, even though I spoke to the person who wrote me the damn check and the money was out of his account in a week.

    I can certainly understand holding until the check clears, but I can’t fathom a reason to continue the hold when the money has long ago left the account of the person who wrote the check.

  45. FLConsumer says:

    Not sure about Sha-mu, but I’ve never had an issue with Wachovia holding any amount I’ve cashed. The longest I’ve ever waited was 2 days, which didn’t seem terribly long.

  46. TaxChick says:

    I guess I am failing to see how WaMu is at fault here. I also made a $49,000 deposit last week also related to the purchase of my first home(strange coincidence). The banking institutions need to verify the checks and get them properly processed. This is something I anticipated. Did my bank warn me in advance, no. They did send a nice letter telling me when it would clear, which was 9 days later- today- in the meantime, though $10K of it was available immediately. It is part of the check processing system. Would we rather them have to eat checks that turn out fraudulent only to have to raise our fees or lower our interest rates on our savings accounts?

  47. AvatarZ says:

    I’ve had the same issue at Wachovia depositing checks from my office. Since we get most of our money on the quarter, I usually have a lot of money to deposit at once. Once they held a 25k check I deposited for over 1.5 weeks. Someone above mentioned splitting up the deposit. However, if the large sum is made of multiple checks, I don’t think they hold the money. I believe it is only held when one individual check is for a large sum.

  48. Red_Eye says:

    My credit union has the same policy I believe for anything over $5,000. Its very common, after all $5,000+ is a lot of money and someone is gonna make some interest off it for 20 days.

    @TaxChick, I agree we shouldnt have to eat fraud. My crdit card checks its balance instantly when I swipe it somewhere and if used for a purchase allocates its funds instantly. Why cant a check do the same thing, as soon as the magntic routing and account # on the bottom of the check is scanned at a grocery storey they check your bank balance to make sure you arent writing a ‘floating’ or bad check. The only difference is in the amounts. If I have a check for 500,000 and the bank I deposit it at magnetically scans the check or manually enters the numbers off the bottom of the check then they should be able to instantly verify the amount is in the account. They should then be able to instantly seize that amount for deposit into your account.

    I’ve see situations where a credit card was charged, a refund issued, and an attempt to recharge for a lesser amount during the same transaction was denied, why? Because the larger first amount was charged and the refund takes a week. WTF? We live in the 21st century, the banking industry can take a check money from my account instantly for businesses but they cant do the same for me?

  49. frieze says:

    The current ridiculous mess of anti money laundering laws on the books pretty much guarantee that this will be a more common occurrence as times go on. Since it is of course actually impossible to determine if money is going to be used for good or evil the current system seems designed to just make banking scary and unpredictable in the hope that criminals will just use other means of exchange and leave our precious banks alone. At least that is the only result I can see.

  50. geek22 says:

    For those who are acting all smug suggesting cashier checks, I had the exact same issue with a cashier check. Wamu held it for three weeks. Cashier check was from a bank across the street.

  51. AmyCU says:

    Believe it or not, last month the Federal Reserve Board said there were no problems with check holding times. Let Congress know that FRB has it all wrong. Here’s information where you can complain to FRB, your bank or any other creditor about check holding times:
    http://www.consumersunion.org/pub/core_financial_services/

  52. brendalu says:

    Interesting. I had virtually the same experience yesterday at WaMu with the $100 now/$4900 in a week/balance in 2 weeks scenario.

    I’m in total agreement that they need to let you know about this before they process the check. I keep very little money in that account – since it’s so easy to do online, I shift everything into savings until I need it – so I wasn’t surprised about the 5 day hold, but 2 weeks? No.

    However, when I protested, the teller immediately went and spoke to the manager, who said that he would contact the issuing bank to confirm funds – if they confirmed, he’d release the hold. An hour later, the teller called to confirm with me that they’d released all holds on the funds and the full amount I’d deposited was available immediately.

    Polite but firm “this is a problem, what can you do to help me” is generally a pretty effective tack in my experience, and certainly it worked for me yesterday.

  53. bluebear says:

    I had this issue too last week. I got 2 checks from National City Bank for $3,700 and $8,000 from Citibank. Went to deposit at Wamu, asked the teller if there were any hold time and she said she could only tell AFTER she deposited the checks. And of course, there will be 11 days hold time for parts of the deposit ($8k) and only $3,700 is available immediately.

    I read the Funds Availability Act and it looks like they should’ve released $5k immediately and the rest within reasonable time. I’ll call the branch first thing tomorrow and ask the manager to release the fund. If they won’t do that, I guess it’s time to shop around for another bank.