A checking account that sits below zero on six banking days inside a six-month window gives a bank the right to slow down deposited funds for the six months that follow. The rule lives in Regulation CC, the Federal Reserve’s funds-availability regulation, and it reaches every account a customer holds at the bank rather than only the one that went negative. For households that run close to the edge between paydays, it decides whether a deposited check is spendable on the next business day or waits on the bank’s own timetable.
The mechanism is a permission, not an automatic penalty. A bank may invoke it, and the regulation then lets the bank set aside its standard availability schedules for the affected accounts. The text is short enough to read in a few minutes, and the details below follow it closely.
Two overdraft tests sit inside paragraph (d)
Paragraph (d) of 12 CFR 229.13 is titled the repeated-overdraft exception, and it opens with a general statement: if an account, or a combination of a customer’s accounts, “has been repeatedly overdrawn,” the bank may treat the customer differently for a stretch afterward. The regulation then defines “repeatedly overdrawn” with two alternative tests, and meeting either one is enough.
The first test counts days. The account qualifies when, “on six or more banking days within the preceding six months, the account balance is negative, or the account balance would have become negative if checks or other charges to the account had been paid.” The second half of that sentence matters: an account that stayed positive only because the bank chose to pay nothing, or because items were pending, can still count as a negative day.
The second test adds a dollar floor and drops the day count. It applies when, “on two or more banking days within the preceding six months,” the balance is negative, or would have been, “in the amount of $6,725 or more.” The $6,725 figure therefore belongs to this two-day test. The six-day test, as the regulation prints it, carries no dollar threshold at all, so a balance that is a few dollars negative on each of six banking days is enough on its own terms.
How the six-month exception period is counted
The look-back window and the exception period are separate clocks, and both run six months. The window asks whether the overdrafts happened in “the preceding six months.” The consequence then lasts, in the regulation’s words, “for a period of six months after the last such overdraft.”
That wording makes the period float. Consider a hypothetical account that reaches its sixth negative day on March 3 and is negative again on March 20. The six months of reduced protection are measured from March 20, not March 3, because March 20 is the last overdraft. An account that keeps dipping below zero can therefore stay inside the exception for a long run, while one that stays positive lets the period lapse six months after the final negative day.
What the exception switches off in sections 229.10(c) and 229.12
The regulation states the effect plainly: sections 229.10(c) and 229.12 “do not apply to any of the accounts.” Those are the sections that otherwise give depositors a floor of quick access. Among the protections in that package, the eCFR text of section 229.12 specifies that a bank must make $550 of certain funds available as cash by 5:00 p.m. on the availability day, in addition to the $275 available under the next-day check rule in section 229.10(c)(1)(vii).
With those sections set aside for a customer, the bank is no longer bound by that schedule for the customer’s deposits during the exception period. The text of paragraph (d) does not itself fix how long any single deposit will be held, and it does not require a hold on every deposit; it lifts the standard schedules and leaves the bank to decide under its own policies, subject to the notice rules below. A household that deposits a paycheck by check can therefore see a delay that a neighbour with a clean six-month record would not.
The written notice that follows an invoked exception
Invoking the exception carries a paperwork duty. Under paragraph (g), the bank must give written notice at the time of the deposit. Where the deposit is not made in person to a bank employee, or where the facts behind the decision only become known after the deposit, the bank must mail or deliver the notice “as soon as practicable, but no later than the first business day following the day the facts become known.”
The notice has to say why the exception was invoked and when the funds will be available, among its required contents. For the repeated-overdraft exception, the stated reason should correspond to one of the two tests described above.
Reading the current text
The eCFR page for section 229.13 showed a currency date of September 25, 2026, with a last-amended date of September 14, 2026, when it was read for this article. The $6,725 figure is the amount printed in that version of the text, and the day counts and six-month periods are the ones quoted above. Anyone checking an actual hold should read the live section and the bank’s own funds-availability disclosure side by side, because the regulation sets the outer limits and the account agreement fills in the rest.
Keeping a paper trail for held deposits
A bank that invokes the repeated-overdraft exception can slow each later deposit for six months, so one household may collect several hold notices in a row. Each notice carries its own deposit date, amount and release date, and the pattern across them is what shows whether the exception is being applied consistently. Tracking that pattern is a record-keeping task.
The Bank Account & Debt Protection Kit is a 10-page guide that includes a protected-funds and dispute log and the frozen-account response, so each deposit, notice and bank reply can be tracked in one place.
Log each held deposit and its notice in a protected-funds and dispute log →
This article was drafted with AI assistance and checked against the text of 12 CFR 229.13 on the eCFR.
