Why does IB place a hold on the funds deposited via check when my bank has already debited the funds from my account?

Overview: 

 

IB, like any bank customer, is subject to the hold periods that banks by regulation are allowed to place upon check deposits. While these regulations generally provide for full availability to be provided within 2 to 5 business days, banks in certain instances may not make the funds available until the 11th business day, and a key factor in determining the availability timeframe is whether the check is drawn upon an institution whose Federal Reserve check processing office is local relevant to IB’s bank (which is determined based upon the routing transit number or ABA bank code listed on the check).  As it is not operationally feasible to distinguish and track the clearance of individual checks given a large and geographically diverse client base, IB has opted to use a uniform hold period of 7 business days for check deposits (with funds made available on the 8th business day).  This timeframe had been selected based upon a review of historical data which suggests that the risk of non-payment of funds to be sufficiently minimal after that period.

 

To minimize any delays associated with the receipt and crediting of deposits, IB strongly recommends that clients deposit funds via wire transfer as this process introduces few of the credit risks or operational overhead typically associated with checks.  In addition, funds deposited in this manner are immediately credited to your account upon arrival and are not subject to any processing fee by IB.

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