indicatorBanking and Fraud Prevention

Understanding release limits

By ATB Financial 15 January 2021 3 min read

Person writing a cheque in their home for work completed

Financial institutions have limits in place on bank accounts and debit cards to help protect you and your account from fraud or losses. In this article, we’ll help answer the most frequently asked questions about release limits, as well as debit spending (or point-of-sale) limits and ABM withdrawal limits.

What are release limits?

When you deposit a cheque into your chequing or savings account, your financial institution may hold a portion of that cheque for a few days until the funds have cleared (the money has successfully transferred from one bank account to another). There are some exceptions, but the cheque hold period is typically five business days. The portion of the money released to you immediately is called a release limit or instantly available funds.

It’s important to understand why release limits are in place. In short, release limits exist to protect you and the financial institution against losses if the cheque does not clear and funds are lost. If the financial institution were to grant you access to the complete funds right away or not have a release limit, they would essentially be extending credit, meaning that if the cheque did not clear due to non-sufficient funds, you would become responsible for repaying those funds (please refer to your account agreement for details). Temporary access to a portion of the funds (instantly available funds) reduces the amount of money that you would potentially have to payback if the cheque did not clear.

To minimize your exposure to non-sufficient funds or fraudulent cheques, make sure you know and trust the person you are dealing with. If you would like to have your release limit increased, you can contact your advisor or local branch for options.

If you receive a direct deposit or an electronic money transfer, there will not be a hold on those funds and you can access the full amount right away.

How are release limit amounts determined?

Not everyone’s release limit is the same. For example, having a better financial track record could mean also having a higher amount of instantly available funds. Securing a higher release limit is dependent on your relationship with your financial institution, including the amount of time you’ve banked with them, average deposit amount, the status of your existing accounts and your overall banking behaviour.

What is a debit spending limit?

Also known as a point-of-sale limit, a debit spending limit is the daily amount you’re able to spend using your debit card, including your mobile wallet.

Another limit you may encounter is a tap limit, which is how much you can spend using the tap functionality of your debit or credit card to make a purchase. These limits may differ by retailer and, in the case of Mastercard products, are set by Mastercard. But they're are in place to protect you and your funds. If you fall victim to theft or fraud, the point-of-sale limit will deter the fraudster from making large purchases or emptying your account.

What is an ABM withdrawal limit?

An ABM withdrawal limit is the amount you’re able to withdraw from an automated banking machine in a single day. This limit is also in place to protect you and your funds. If you became a victim of fraud, having this limit in place can protect you and the financial institution from loss by making sure your full balance isn’t accessible.

Can I change these limits?

You might, as an example, need to change your limits to make a special purchase. For point-of-sale and ABM withdrawal limits, clients with an ATB Visa Debit card can temporarily change their limits in ATB Personal. If you have a legacy debit card, please call our Client Care team or visit a branch to do so. Your limit will automatically revert to its original amount in approximately 48 hours. You’ll also need to call or visit a branch to have your cheque release limit increased.

If you want to ensure you aren’t impacted by a release limit, having your employer switch from cheques to payment by direct deposit or electronic transfers is the best option.

Like what you just read?

Subscribe to On the Money by ATB and get more helpful information sent straight to your inbox.

You might be interested in

Need help?

Our Client Care team will be happy to assist.