If I recieve a large amount of money through Direct Deposit (eg. 25,000), Are the funds instantly availiable ? OR Is there a waiting period like a standard check ? The issuer is a insurance company in the same state as me.
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How big it is is irrelevant. It's HOW the transfer is made that matters. A direct deposit is instantly available as there is no clearing to do. Their bank pays it to your bank, it accepts the money, done. Usually in a couple of hours at most.
A check takes time to clear because a check isn't money, it's only an instruction to pay. So your bank (Bank A) needs to check with the other bank (Bank B) that the account it's written on actually has the money in it or it's within the overdraft limit, and ask it to pay the money over. This gives Bank B the chance to refuse payment if the account doesn't have the money in it - then the check has "bounced". After all, Bank B doesn't even know the check has been written until Bank A asks it! Back in the day, this had to be done by physically passing checks around so it took a few days, and for some reason it still does. So a refused check literally does bounce back to Bank A to tell them "we're not paying".
So you can see that the clearing process just doesn't apply to direct deposits. There's none of this passing paper around to do.
For example, here in the UK (where we call these pieces of paper "cheques"), the normal thing when you bought a house years ago is the final payment on completion day (no doubt made by whoever you get your mortgage from) would be made by banker's draft. This is a cheque written on the bank's own account so it's guaranteed not to bounce, it WILL get through the clearing process, and you can safely move in that day. What is done now is to do a direct deposit through CHAPS, which will get there the same day. As does any electronic payment you make online.
Undoubtedly this insurance company will use the US equivalent of CHAPS. So as soon as you see it's in your account, it's available funds.
STEVEN F
In the US, Federal law mandates that electronic deposits are 'available' instantly. That is 100% UNRELATED to being 'cleared'.
Richard
Direct Deposit and Wired transactions should be instantly available, unless you are dealing with a crooked bank.
Judy
probably a waiting period
Casey Y
It should be available immediately.
That's an ACH or EFT transfer, not a direct deposit...not a huge deal, but technically different.