This project proposes to enhance the existing deposit holds features so that a credit union can opt to release funds more gradually when placing holds on incoming checks or electronic deposits.
Ideas We’re Tossing Around
Method 1: Adapt the concept of plateau/split rates for savings products to the existing “holds by check amount” feature in the CU*BASE Automated Deposit Holds configuration (Tool #849). The CU would choose whether to place a single hold on the entire check amount (same as now), or to place multiple holds per deposit, one for each tier. Up to 6 tiers can be configured, using the ranges already available. The Reg CC next-day release, if appropriate, would come out of the first tier only.
- Pros: Uses the existing configuration for holds by amount with a new flag for choosing whether you want those tiers to be for the entire amount, or individual holds per tier.
- Cons: Will require that teller and mail/direct post screens can no longer allow users to specify hold days manually, since there could be multiple holds depending on how many of the six available tiers are in use and that apply to a particular deposit.
Method 2: Similar to method 1 but limited to two tiers per deposit, allowing funds to be released differently for amounts below a threshold (such as $5,000) than for amounts higher than that threshold, on the same deposit. For example, if a member makes a $17,500 deposit, the system could be instructed to hold the first $5,000 for 3 days, and the remaining amount ($12,500) for 7 days. The Reg CC next-day release, if applicable, would come out of the first tier only (the $5,000 in this example).
- Pros: Simpler than method 1 and more in line with large-deposit hold concepts that are commonly used by financial institutions (a threshold of $5,000 is typical).
- Cons: Requires that teller and mail/direct post screens allow for the user to specify both the below-threshold holds days as well as the above-threshold hold days when making a deposit. Or like method 1 we’d have to change so that users can no specify hold days manually when posting deposits. Requires new configuration settings to be programmed for each individual channel.
Method 3: With this method we add a simple global setting that applies to all holds placed through all channels. This setting would specify a number of days to add to the regular number of hold days configured (by amount or other configuration setting) to any amounts above a particular threshold. For example, if a member deposits a $17,500 check, the system could be instructed to hold the first $5,000 for the usual number of days (say 3), and the remaining amount ($12,500) for an additional 4 days (say 4, for a total of 7 days on the second hold).
- Pros: Will not require any changes to teller and mail/direct post screens, as the user would still simply specify a “normal” hold period, and the system would automatically tack on additional days for large deposit items.
- Cons: Less flexibility by channel as all channels will use the same formula (although the base number of hold days could still be different by channel, like now).
For all methods, changes would be needed on the Electronic Deposit Hold Group code, which allows special settings to be applied to individual memberships, such as for brand-new accounts or other special situations.
All methods will require us to rethink how hold release dates are reported to members on teller receipts. Currently there is a simple “funds available on xx/xx/xxxx” statement which refers to the entire deposit amount. Now we’d need to report at least two or potentially up to 6 different dates and amounts.
How Uncollected Funds Holds Would Work
Whichever method we choose, to accomplish the different hold periods we would take advantage of how our current uncollected funds records already work. Two separate hold records would be created, and the Reg CC next-day release, if applicable, would apply only to the first one.
The above sample shows how a deposit of $17,500 would be handled, if a CU had set the new flag to add 4 days to any deposits over $5,000. Notice how the Reg CC release date on the first $5,000 is set to the next day (this sample assumes the CU is using calendar days), but the hold on the remaining $12,500 has a Reg CC release date that is the same as the release date for the entire hold (meaning an additional $225 will not be released out of that amount).
Status: Still in very early design phases.