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Expedited Funds Availability Act (EFAA)


The Expedited Funds Availability Act (EFAA) is a United States federal law enacted in 1987. It mandates that banks make deposited funds available for withdrawal within specific timelines, enhancing the efficiency and fairness of the banking systems. It also includes provisions to deal with bounced checks and other issues.


The phonetics of the keyword “Expedited Funds Availability Act (EFAA)” would be:”Eks-peed-it-ed Funds Avail-uh-bil-it-ee Act (EH-FAH)”

Key Takeaways

  1. The Expedited Funds Availability Act (EFAA) was enacted by the United States Congress in 1987 and is a federal law designed to standardize hold periods on deposits made to commercial banks and to regulate the use of deposit holds by banks.
  2. Under the EFAA, banks are required to make funds available to their customers within specific time frames, typically within one to five business days, depending on the nature of the deposit. This enables customers to access their deposited funds more quickly and improves the efficiency of the banking system overall.
  3. Lastly, the EFAA imposes penalties on banks that fail to comply with its requirements. It aims to protect customers from potential issues like insufficient funds or overdraft fees due to bank delays in making deposited funds available.


The Expedited Funds Availability Act (EFAA) is crucial in the field of business/finance for its impact on transaction efficiency, security and customer satisfaction. Enacted in 1987 by the United States, this regulation mandates banks to make deposited funds available to customers within a specified time frame. This ensures that depositors can access their funds promptly, which aids in facilitating seamless business operations and personal transactions. Furthermore, the EFAA protects consumers by ensuring that they are not unfairly penalized for bounced checks or delays in funds availability. By providing mechanisms for accelerated cheque clearance and mitigation of related risks, the act significantly contributes to the stability and credibility of banking operations. It also greatly enhances customer confidence and satisfaction with banking services.


The Expedited Funds Availability Act (EFAA) was introduced with the primary purpose of addressing the issue of check holds – a period during which banks could withhold the availability of funds from deposited checks. Before EFAA, banks could hold checks for an undefined number of days, leaving the depositor without access to their own funds for an extended time period. This could be extremely inconvenient for individuals and businesses who rely on prompt access to their deposited funds for regular operational expenses or time-sensitive investments.

The EFAA is used mainly to regulate the amount of time a bank can legally hold deposited funds. It mandates financial institutions to make depositor’s funds available in a timely manner, primarily to protect consumers. The regulation includes provisions for when various types of deposits (like electronic, cash, or local and non-local checks) should be made available and also provides measures for dealing with specific situations such as large deposits or repeated overdrafts. This law, therefore, creates a standardized schedule for the availability of deposited funds and promotes fairness and consistency across the banking sector.


1. Bank Withdrawals: Imagine a person deposited a check into their account at a bank on Monday. Under the Expedited Funds Availability Act (EFAA), the bank would generally have to make the first $200 of that check available for withdrawal by the next business day, Tuesday.

2. Online Deposits: In another example, let’s say a customer receives a paycheck and instead of going to the bank, they use their mobile app to deposit the check electronically. The EFAA would apply here as well – the bank should have the first $200 of that deposit available by the next business day.

3. Cashier’s Check Deposits: Suppose an individual received a $500 cashier’s check. After depositing it in the bank on Monday, the whole amount, under the EFAA, would typically be available by the following business day, considering cashier’s checks fall under ‘next-day items’ specified under the EFAA.

Frequently Asked Questions(FAQ)

What is the Expedited Funds Availability Act (EFAA)?

The Expedited Funds Availability Act (EFAA) is a U.S. law passed in 1987, aimed at standardizing hold periods on deposits made to commercial banks and to regulate financial institutions’ use of deposit holds.

Who is the regulatory authority for EFAA?

The Federal Reserve Board is responsible for regulating and enforcing the Expedited Funds Availability Act.

Why was the EFAA enacted?

The EFAA was enacted to ensure that banks make money from deposits available to customers within a specified time and to fulfill other requirements regarding the management of deposits.

How does the EFAA benefit depositors?

The EFAA benefits depositors by ensuring that banks make the funds from the depositor’s checks available within a few days thus providing quicker access to their money.

What does the term ‘funds availability’ refer to under EFAA?

Under EFAA, ‘funds availability’ refers to the length of time a bank can hold the deposit before crediting it to the depositor’s account. As per the EFAA guidelines, the bank is required to make deposited funds available promptly.

How does EFAA deal with ‘next-day availability’?

The ‘next-day availability’ in EFAA refers to a rule where some types of deposits, like cash deposits, electronic payments, and US Treasury checks, must be made available no later than the business day after the deposit is made.

What happens if a bank does not comply with EFAA regulations?

If a bank does not comply with EFAA regulations, it may face penalties and other enforcements outlined by the Federal Reserve Board.

Are there any scenarios where the bank can delay availability under EFAA?

Yes, there are exceptions under the EFAA where the bank can delay the availability of funds. Examples include large deposits exceeding $5,000, repeated overdrafts, reasonable doubt of collectability, among others.

Does the EFAA cover electronic deposits/transactions?

Yes, EFAA regulations cover electronic transactions. Banks must make electronic direct deposits available to the recipients by the opening of business on the deposit settlement date.

: How does the EFAA impact international transactions?

: Under the EFAA, banks can hold funds from foreign deposits or checks for a longer time compared to domestic deposits because of the time it takes to collect funds from foreign financial institutions.

Related Finance Terms

  • Check clearing process
  • Bank deposit waiting period
  • Non-local checks
  • Check 21 Act
  • Federal Reserve Regulation CC

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