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Hold on Postal Money Order?

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Question: 
Can a hold be placed on a postal money order?
Answer: 

Under Federal Reserve Board Regulation CC, which implements the Expedited Funds Availability Act, a postal money order, when deposited in person with an employee of the bank and into an account of a payee, is a next day item under Section 229.10(c)(1)(ii). If the money order is not deposited to an account of a payee, it loses its next-day status, and can be treated as any other check.

Even as a next-day item, however, it could be subject in whole or in part to an exception hold under Section 229.13. For example, if a deposit includes only next-day items and exceeds $5,000, the excess over $5,000 can be held under Section 229.13(b) until the seventh business day. If deposited to a new account, the excess over $5,000 can be held until the ninth business day.

If the depositor is considered repeatedly overdrawn under Section 229.13(d), or if the bank has a reasonable doubt that the money order will be paid, the entire money order amount can be held until the seventh business day. Of course, if the bank doubts the collectibility of the money order, it should simply refuse to accept it for deposit in the first place.

First published on BankersOnline.com 12/06/10

First published on 12/06/2010

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