Fetterman to Fed: Update check hold rules

Senator John Fetterman, D-Pa., wants the Federal Reserve Board to update its regulations to expedite payments and speed access to paycheck funds. "Slow payments create major costs for workers, retirees and small business owners," Sen. Fetterman wrote in a June 30, 2026, letter to Federal Reserve Chairman Kevin Warsh.

For example, Fetterman noted, Fed research revealed that 78 percent of Americans would face financial hardship if their next paycheck were delayed by just a week.

"When family budgets are tight, earlier access to paychecks allows people to avoid late fees, steer clear of overdrafts, and earn more interest on their savings," Fetterman wrote.

Fed determines check-hold times

The Expedited Funds Availability Act delegated responsibility to the Fed for reducing the time banks can hold deposited funds before making them available. At the time, 1987, it wasn't unusual for banks to place holds of a week or more on check deposits.

Under the EFAA, the maximum hold a bank can place on a check drawn on a local bank is two business days. Holds can be extended by up to an additional five business days if the deposit-receiving financial institution has "reasonable" reasons to believe the check may not be collectible.

Cases considered reasonable may include, for example, when a customer depositing a check has a history of overdrawing their account, the deposit is to a newly opened account, or the customer is depositing a very large check (greater than $6,725). Even in these cases, $275 of the deposit must be made available to the customer by the next business day. The Fed's Regulation CC sets out the specific requirements of the EFAA.

Times have changed

Fetterman noted in his letter to Warsh that much has changed in the way checks and other payments are cleared since 1987. For example, the Check 21 Act, enacted in 2004, "vastly" improved check clearing, replacing the exchange of paper checks with electronic image exchanges. Also, the majority of payments these days are being processed electronically (often via ACH).

"Payment technology has advanced as well, enabling payments to be cleared and settled in real time," Fetterman wrote. Hence the need for holds has been minimized.

A petition was filed with the Fed in 2024 formally asking that it update Reg CC to shorten permissible check-hold times. "The Fed has still not responded to the petition," Fetterman wrote. "I urge the Fed to provide a detailed response to that petition and to begin the mandated rulemaking process to lower check and Direct Deposit [hold] times, in order to give working families, seniors and small businesses access to their hard-earned money more quickly."

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