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What Is Regulation CC? Definition, Purpose and How It Works


Regulation CC is a federal policy that standardizes how banks handle check deposits and ensures prompt customer access to deposited funds. Established by the Federal Reserve, it sets rules for check clearing processes and dictates maximum hold times on checks. Its primary purpose is to enhance the check collection system, safeguard customer interests, and expedite the availability of funds to bank customers.


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Key Takeaways

  1. Definition: Regulation CC, also known as the “Expedited Funds Availability Act” , is a federal policy that sets certain standards on how quickly banks must make deposited funds available to their customers. It outlines the maximum amount of time that a bank can hold a check deposit before making funds available for withdrawal.
  2. Purpose: The main aim of Regulation CC is to ensure a degree of uniformity and transparency in the way banks handle check deposits. It safeguards customer rights by ensuring that banks cannot hold on to deposited funds for an unreasonable period, thereby enhancing consumer confidence and the overall functionality of the financial system.
  3. How It Works: According to Regulation CC, banks are typically required to make the first $200 of a non-next-day check deposit available by the next business day. The remaining amount should be made available in subsequent days, depending on the type of check deposited. However, in certain circumstances, such as repeated overdrafts or suspicion of fraud, banks are allowed to delay the availability of funds.


Regulation CC, also known as the Expedited Funds Availability Act, is crucial in the banking and finance sector as it sets the standard for the amount of time banks are allowed to hold deposited checks before making the funds available to customers. Enacted in 1987 by the Federal Reserve System, its primary purpose is to accelerate the availability of funds from deposited checks, discourage delay in the check payment system, and enforce the return of unpaid checks. Therefore, Regulation CC ensures customer protection by promoting efficiency and convenience in the check processing system, reducing the potential for fraud, and mandating specific disclosure requirements, thereby fostering transparency and trust in the banking sector. It’s important for a financial institution to comply with Regulation CC to avoid penalties and for consumers to understand their rights regarding access to their deposited funds.


Regulation CC, also known as the Expedited Funds Availability Act, was established by the Federal Reserve to standardize policies governing the handling of check deposits by banks and to clarify the schedule by which banks should make funds available for withdrawal. The overarching purpose of Regulation CC is to mitigate the amount of time banks can delay the availability of deposits, to provide consistent standards, and to promote efficient check processing within banks.Under Regulation CC, the check-holding period is typically one to two business days for local checks and five business days for non-local checks. In essence, the regulation is meant to provide consumers greater access to, and enhanced certainty about, their funds. The timeframe helps protect consumers from suffering unduly lengthy waiting times for funds to clear but also gives banks reasonable time to ensure that the funds on a given check are legitimate and safe to release. Hence, Regulation CC plays a crucial role in enhancing the efficiency of the banking system and fostering consumer trust.


Regulation CC, also known as the Expedited Funds Availability Act, is a federal policy that stipulates the maximum amount of time a financial institution can hold a check deposit before making funds available to a customer. Here are three real-world examples of how Regulation CC functions.1. Example One: Personal Banking – Suppose you deposit a check from your employer at your local bank on a Monday. Due to Regulation CC, the bank is required to make the first $225 available on the next business day. If there’s no concern or reason for longer delay, the entirety of your funds should be available to you by Wednesday.2. Example Two: Business Operations – A small business deposits a large check from a client. The bank might hold this deposit for a “reasonable” period of time due to the size of the check. According to Regulation CC, however, the bank must still make the first $225 immediately available and would likely make all the funds available within seven business days, allowing the business to access their funds in a timely manner.3. Example Three: Check Clearing Between Banks – Suppose you write a check from your account at Bank A to a friend, who deposits the check at Bank B. In this scenario, Regulation CC governs how quickly Bank B must credit your friend’s account. This regulation ensures the speed of check clearing between banks, therefore benefitting consumers in the process.These examples underline how Regulation CC contributes towards maintaining an efficient, safe and sound monetary environment for both consumers and financial institutions.

Frequently Asked Questions(FAQ)

What is Regulation CC?

Regulation CC or Reg CC is a federal policy established by the Federal Reserve that sets specific rules and guidelines on the availability of deposited funds and check endorsements in the United States. It’s also known as the Expedited Funds Availability Act (EFAA).

What is the main purpose of Regulation CC?

The main purpose of Regulation CC is to standardize the hold periods on deposits made to commercial banks and to regulate the collection and return of checks.

How does Regulation CC work?

Regulation CC works by setting a schedule that determines a reasonable period of time for a bank to make deposited funds available to its customers. It also outlines the bank’s responsibilities and liabilities in the event of loss to its customer due to the mishandling of check returns.

Does Regulation CC apply to all financial institutions?

Yes, Regulation CC applies to all financial institutions offering checking or similar accounts which are insured by the FDIC, including commercial banks, savings banks, savings and loan associations, and credit unions.

What types of deposits are covered by Regulation CC?

Regulation CC covers most types of deposits, including checks, cash, wire transfers, and electronic payments. However, there are complexities in the clause for different types of checks and situations.

What are the typical hold periods defined by Regulation CC?

The length of the hold period can vary depending on the type of check and the amount. However, under normal conditions, some funds from check deposits must usually become available for withdrawal by the next business day. The full amount is typically available by the second business day.

What impact does Regulation CC have on consumers?

Regulation CC protects consumers by ensuring they have timely access to the funds they deposit in the bank. It also provides a recourse if the bank mishandles check returns or deposits.

Are there penalties for financial institutions that do not comply with Regulation CC?

Yes, Regulation CC includes provisions for penalties against financial institutions in violation of its stipulations, which can include financial penalties and requirements for restitution to affected customers.

Related Finance Terms

  • Availability Schedule: This is a part of Regulation CC that outlines the maximum periods of time within which a bank should make funds available to its customers after a deposit.
  • Expedited Funds Availability Act (EFAA): This act, passed by U.S Congress in 1987, is the foundation for Regulation CC, aimed at standardizing hold periods on deposits made to commercial banks and to regulate institutions’ use of deposit holds.
  • Depository Banks: These are financial institutions, such as banks and savings institutions, that offer a wide range of services including check clearing, which is covered by Regulation CC.
  • Non-sufficient Funds (NSF): This term refers to a scenario where an account does not have enough money to cover a presented payment, which could be affected by the timelines and procedures stated in Regulation CC.
  • Check Clearing: The process by which banks exchange checks or drafts drawn on each other and perform settlement of money transfer, regulated under Regulation CC.

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