April 28, 2012 | In: General

How Much Does a US Check Take to Clear in a Canadian Bank?

Canadians doing business with the US and receiving checks from there often wonder how much time it takes for US checks to clear. In order to answer this question, I need to explain two concepts in the Canadian banking system: hold time and clearing time…

Hold time: Let’s say you received a check from the US for $5,000. You go to your financial institution, and you deposit the check. The teller will tell you that since it’s a US check, they will deposit it for you but they will hold the funds for 10 business days (the number of these days vary from one bank to another) during which you can see the $5,000 in your account, but you can’t do anything with them. The hold will be released after 10 days. However, if the teller knows you, then s/he can make the funds available immediately. (That’s why it’s always good to have a good relationship with your bank).

Clearing time: Once the check is deposited, the clearing time is the number of days it takes for your financial institution to capture the funds from the US financial institution. The clearing time varies depending on your bank and the other bank.

So, after differentiating between the hold time and the clearing time, how much time does it take for US check to clear in Canada? Well, as stated above, it depends on your bank and the sender’s bank:

- If your bank is one of the Big 5 (BMO, CIBC, National Bank, RBC, TD) and the other bank is a top US federal bank (BofA, Chase, Citi, Wells Fargo, etc…) then the check can take as little as 2 days to clear. Sometimes, the check can clear on the same day! Yes, that’s how interconnected the Canadian and the US banking systems are!

- If your bank is one of the Big 5 and the other bank is a Mom and Pop bank (and there are many of them in the US), then the check can take up to 7 business days to clear.

- If your bank is one of those small Canadian banks, and the other bank is a top US federal bank, then the check can take up to 7 business days to clear.

- If your bank is one of those small Canadian banks, and the other bank is a Mom and Pop bank, then the check can take up to 10 business days to clear (sometimes even more).

A couple of tips on dealing with US customers:

  • Always ask for certified checks
  • Always ask for an email confirmation from your clients telling you that they have sent the check (trust me on this one)

What if the check bounces, and the funds were already released?

In this case your account will be debited for the amount of the check + a fee (usually $20).

What if the check bounces, and you have closed your account?

In this situation, the bank would have paid you the money without getting any money from the US bank. The bank will try to get the money from one of your other accounts. Failing that, the bank will sue you to get its money.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

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