Immediate Credit

What is ‘Immediate Credit’

The Federal Reserve practice of “clearing” checks deposited by member banks on the same day they’re deposited. This service is only available when the Federal Reserve has one of its branches in the same city as the bank wishing to process the check. Normally, checks are subject to “deferred availability” which means the amounts are made available within two days of deposit.

Explaining ‘Immediate Credit’

The Federal Reserve’s policies on immediate credit and deferred availability often have little to do with the actual policies at your local bank. Some banks make funds immediately available on any checks deposited by their customers, some place limits on the amount available, while still others hold all checks over a certain amount. Consumers should be wary of banks that routinely hold checks even when there is no history of bounced checks. This is often a bad sign, in that a bank may be trying to earn a little extra interest off their customers’ money.

Further Reading

  • The Immediate and Lasting Impacts of the 2008 Economic Collapse-Lehman Brothers, General Motors, and the Secured Credit Markets – [PDF]
  • An economic model of trade credit – [PDF]
  • Privacy in electronic commerce and the economics of immediate gratification – [PDF]
  • Immediate challenges for the European central bank – [PDF]
  • Brazil and India in the global economic crisis: Immediate impacts and economic policy responses – [PDF]
  • Mexico: Large, Immediate Negative Impact and Weak Medium-Term Growth Prospects – [PDF]
  • Changing college students' financial knowledge, attitudes, and behavior through seminar participation – [PDF]
  • Should access to credit be a right? – [PDF]