Amounts under Regulation CC for Making Check Deposits Available to Customers to Increase as of July 1, 2020

The Federal Reserve Board and the Consumer Financial Protection Bureau (jointly, the “Agencies”) have amended Regulation CC, the regulation that requires depository institutions to make funds from check deposits available to customers within certain timeframes. The amendments, which take effect on July 1, 2020, increase certain dollar amounts based on changes in inflation and will require depository institutions to make certain system changes and issue change-in-terms notices to customers.

I. Background

Regulation CC requires depository institutions to make funds from checks deposited by a customer available for use by the customer within specified time frames. The amounts and timing for making these funds available vary depending on the type of check and how it is deposited. The amounts have generally remained unchanged since Regulation CC become effective in 1988.

The Dodd-Frank Act of 2011 provided for adjustments to the amounts that must be made available for check deposits under Regulation CC every five years based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (“CPI-W”), with such amounts rounded to the nearest multiple of $25. The Agencies have now implemented this requirement by scheduling the first adjustment for July 1, 2020.

II. Adjustments

The Agencies have calculated adjustments to various amounts under Regulation CC based on changes in the CPI-W. Among the changes that will take effect as of July 1, 2020 are the following:

• Institutions are currently required to make up to $200 of certain check deposits available to the customer on the next business day -- this amount is increasing to $225;
• Institutions are permitted to extend a hold by one business day for withdrawals by cash or similar means -- the amount that must be made available to the customer despite this extended hold is increasing from $400 to $450;
• If an exception to an availability requirement applies, such as for new accounts and large deposits, the extended hold permitted currently applies to amounts in excess of $5,000 -- this amount is increasing to $5,525.

These new amounts will be adjusted again as of July 1, 2025, and then every five years thereafter. The Agencies intend to publish the new amounts one year in advance of each adjustment date.

III. Customer Notice

Because Regulation CC requires an institution to notify customers of changes in the institution’s availability policy, these changes to the availability amounts require institutions to send a change-in-terms notice to deposit customers. Regulation CC requires such a notice at least 30 days before a change in the availability policy, except that a change that expedites availability may be made not later than 30 days after the change is implemented.

Depository institutions had requested that the Agencies provide an exception to the change-in-terms notice requirement for these inflation adjustments. However, the Agencies declined to provide such an exception.

IV. Additional Information

The Regulation CC final rule is available here. Please note that this advisory is a general overview of the amendments to Regulation CC and is not intended as formal legal advice. If you have any questions regarding Regulation CC, please feel free to contact Joseph D. Simon at (516) 357-3710 or via email at jsimon@cullenanddykman.com, Kevin Patterson at (516) 296-9196 or via email at kpatterson@cullenanddykman.com, Elizabeth Murphy at (516) 296-9154 or via email at emurphy@cullenanddykman.com, or Mandy Xu at (516) 357-3850 or via email at mxu@cullenanddykman.com.