How Do Bank Holidays Affect Direct Deposit?

Quick Answer

Employees may have to wait an extra day for a direct deposit to clear if your payday falls on a holiday. The Federal Reserve pauses ACH payments on federal holidays, which delays payments like direct deposits one business day.

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Here's the scenario: It's payday, which couldn't come any sooner because you've got bills to pay. But unfortunately, this payday falls on a holiday your bank observes. Will the bank holiday affect your direct deposit?
If payday falls on a bank holiday, employees generally won't receive direct deposits until the next business day. Here's what you need to know about bank holidays, including which holidays banks observe and how to plan ahead to avoid overdrafts.

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What Happens if Payday Falls on a Bank Holiday?

A bank holiday can throw a wrench into your finances if it delays a direct deposit you're relying on to cover an urgent expense or meet a payment deadline. Here's a breakdown of what can happen if your payday falls on a bank holiday.

Direct Deposits Take Longer

Generally, when a direct deposit is scheduled to hit your bank account on a bank holiday, you must wait an extra business day for the transaction to process. Some employers anticipate upcoming holidays and adjust their payroll schedule to send out payments before the holiday so you can get paid sooner. It's a good idea to check with your payroll department ahead of time to find out when they'll deposit your paycheck when there's a holiday.

Paper Paychecks' Clear Time Is Extended

When you must deposit a paper check larger than $200 into your account, the bank usually puts a hold on the funds for two business days before you can access it. If you deposit the check on a holiday, expect to wait an additional business day.

If you're fortunate enough to receive the paycheck the day before a holiday, you may avoid longer hold times by depositing the check before the bank's daily cutoff time to conclude the business day. Keep in mind, your bank's cutoff time can be as early as 2 p.m. at physical locations and noon at ATMs. You might use your bank's mobile app, which may have a later cutoff for check deposits to be credited on the same day.

Government Benefits Are Also Delayed

Government benefits like unemployment, disability and Social Security payments are processed through ACH. That means if your regular payment day lands on a holiday, you may have to wait an extra business day to receive the money.

Which Holidays Do Banks Observe?

The Federal Reserve observes 11 bank holidays throughout the calendar year. Some banks observe additional holidays, so it may be worth contacting your bank to verify their holiday schedule. Refer to this schedule of official bank holidays in the United States to plan ahead appropriately.

Official Bank Holidays in the United States
2024 2025
New Year's Day January 1 January 1
Martin Luther King Jr. Day January 15 January 20
Washington's Birthday February 19 February 17
Memorial Day May 27 May 26
Juneteenth June 19 June 19
Independence Day July 4 July 4
Labor Day September 2 September 1
Columbus Day October 14 October 13
Veterans Day November 11 November 11
Thanksgiving November 28 November 27
Christmas December 25 December 25

Source: The Federal Reserve

Can You Use Your Bank Account on Holidays?

As a general rule, you can still use your bank account on federal holidays, but since the Federal Reserve is closed, any transactions you make won't post to your account until the next business day.

Most banks close their doors on holidays, though some remain open. If a holiday falls on a Saturday, some banks may observe the holiday on the preceding Friday. Similarly, banks may close on a Monday to recognize holidays that land on a Sunday.

Remember, weekends and federal holidays are not considered business days, so you may need to wait a little longer for any deposits you make to process. Along the same lines, transfers to or from another bank will take longer to process, but transfers within the same bank typically process as usual, even on bank holidays.

You can still make ATM withdrawals and balance inquiries on holidays. Also, many banks, particularly online banks, offer 24-hour customer support, even on holidays.

How to Prepare for a Bank Holiday

A little planning goes a long way toward avoiding financial issues caused by a delayed direct deposit.

  • Plan ahead for expenses and needs. Regularly reviewing your account balance and upcoming bills is a wise financial habit and even more crucial before a holiday. Take steps to ensure your payments are made on time. And if you think you'll need cash on a bank holiday, you might withdraw funds a day or two beforehand to have the cash on hand when you need it.
  • Keep an eye out for automatic payments. Since a direct deposit to your account could be delayed a business day, your account could be overdrawn if an automatic payment processes before your paycheck clears. One way to avoid overdrafts and the associated fees is to make the payment before the holiday, even if you need to pull funds from your savings to cover the amount. Alternatively, you could change your payment date to occur before the holiday or afterward when your direct deposit is processed.
  • Take advantage of online and mobile banking. While a mobile check deposit will still take an extra business day to process on a bank holiday, you can still use these platforms to manage your finances, set alerts and schedule payments in advance.

Be Proactive When Managing Your Finances and Your Credit

Bank holidays can delay a direct deposit by one business day, which can be an inconvenience if you urgently need cash or are up against a payment deadline. As you make your monthly budget, look ahead to upcoming holidays to get ahead of any potential issues. You may be able to talk to your employer's payroll department to arrange for an earlier paycheck or change a payment date to avoid overdrawing your account while waiting for direct deposit to process.

As you manage your finances, it's also a good idea to keep an eye on your credit. You might consider checking your credit report and score for free with Experian. Maintaining strong credit can help you access loans at favorable rates for important milestones like owning a home or car.