Banking question input greatly appreciated

[dreaming of canada]

Ok so my husband and I are both working and have received our first paychecks last week.  Our bank CIBC has put a hold on our checks that are direct deposited into our account.  So today I called to inquire why? our account shows that our checks have been deposited but are not counted as available funds.  The answer was that there is a mandatory 5 day hold for all checks even paychecks.  I reminded them that we do have a savings account with a good sum as a balance.  Was told it does not matter.  There is no such thing as overdraft from savings like in USA.  In the states there was no 5 day hold when your paycheck was deposited.  I was told that maybe once I have had the account for 12 months the bank may decide to release the funds before the 5 days.  So is this really the case?  Makes it hard if you have a bill due and have to wait 5 days for your paycheck to clear.  Your thoughts are greatly appreciated. 

[Leon]

If there is a direct deposit, there should be no clearance time.  CIBC is not a very good bank.  I have personal experience with that.  Go to TD or BMO and ask them if they have a clearance time.  I ended up going to Presidents Choice, the bank at Superstore and I never had any clearance period for my paycheck.  Besides they are free.  However, they don't have any branches so they are only suitable for you if you can do your banking completely online or through the phone.

[scylla]

Was the pay a direct deposit (i.e. deposited electronically by your employer?) or did you receive a (paper) pay cheque that you physically deposited through an ATM or teller?

II've banked with both TD and Scotia - and direct deposit pay should be available to you as soon as it hits the account.

Also, you certainly should be able to add overdraft to a chequing account. (I've always had overdraft available on my chequing accounts.)

[scylla]

Ignore my first question. I re-read your original post and can see the money was deposited directly.

It should be available to you immediately. Go find another bank. This makes zero sense.

[MCBoy]

It is called "holding". It should not happen if it is a direct deposit. Make sure if your direct deposit was Electronic or paper Cheque. What ever the cheque/amount may be, a bank will place holds on your deposited cheques to avoid hassles of "bouncing".

They hold it for a few days and then release it on clearance. This happens on all paper cheques and on most of the banks. I have a TD and Scotia, they both have that. My direct deposit is electronic, so "real" funds gets transferred.

When you drop a cheque, normally the bank takes a risk in cashing it out immediately, which is covered by bank's insurance. But, in Canada it is normal clause for banks to hold the cheque.

This may get removed as your relationship with the bank grows, for ex. say in 2 yrs you have deposited 10 cheques, and none bounced, and you maintain a "Good" standing as per the banks terms, then the bank will offer you no hold.

For new customers there is always a hold, irrespective of your credit score.

I would recommend TD for banking, they are one of the biggest, and the best. The above information is from the TD representative, when I first asked her, what is "holding".