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Payable Through Check - Local or Not?

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I was reading a response to a question regarding a hold on an insurance draft or credit card check. I want to make certain that it is OK to put an exception hold on this type of check, if over $5000, release $100 next day, $4900 in 2 or 5 days and the balance over $5000 in 7 or 11 days. What started my search was I was trying to determine if I had a "credit union" cashiers check (local), payable through a (non local) bank, which routing number do I use to determine the hold?

You are always permitted to impose an exception hold under Section 229.13(b) for check deposits over $5,000, assuming, of course, that you make the proper notification. The release schedule you describe is appropriate in such a case.

If a check is labeled in accordance with Section 229.36(e) as "payable through" a bank other than the drawee bank (as is sometimes the case with credit union checks), you base your local/non-local decision on the information in the Section 229.36(e) label, and not on the MICR line. In the scenario which you describe, the check will be MICR-encoded with the payable-through bank's routing number, but labeled under Section 229.36(e) as payable by the local credit union. Base your local/non-local decision on the four-digit routing symbol of the credit union, and consider the check local.

First published on 4/4/05

First published on 04/04/2005

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