Vanguard MM 10-day hold on written checks

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vectorizer
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Vanguard MM 10-day hold on written checks

Post by vectorizer » Wed Aug 21, 2019 5:07 pm

My SO and I have held a joint Prime Money Market account at Vanguard for many years as our central cash conduit to banks, emergency savings, and to write checks for extraordinary expenses. Substantially all our investments are held at Vanguard too FWIW.

We've been paying multiple contractors for work on our house the last couple of years with checks written against the MM. Our current cement contractor is complaining that the checks we give him are subject to a 10-day hold by his bank; the MM checks I give him are in the low thousands each. No other contractor has had this complaint. He's asked (but not demanded) that I give him cash for the final draw for his completed work. I really don't like to pay with cash but he's been reliable and reasonable, and I have no way to verify or refute his bank's hold policy, so I'm inclined to give him cash this one time.

Has anyone else heard of a 10-day hold imposed on Prime MM checks presented to banks?

sport
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Re: Vanguard MM 10-day hold on written checks

Post by sport » Wed Aug 21, 2019 5:11 pm

It seems to be a problem with the contractor's bank, not with Vanguard. If you have a local checking account, you could link that account to Vanguard and transfer the money to that account, and then write a local check. I would not want to pay in cash.

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BL
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Re: Vanguard MM 10-day hold on written checks

Post by BL » Wed Aug 21, 2019 6:23 pm

sport wrote:
Wed Aug 21, 2019 5:11 pm
It seems to be a problem with the contractor's bank, not with Vanguard. If you have a local checking account, you could link that account to Vanguard and transfer the money to that account, and then write a local check. I would not want to pay in cash.
+1
I did the transfer on Friday and it was at the bank this morning (Tuesday). They said about 2 business days. If they don't have your bank approved already, it may take longer with small test deposits and withdrawals.

anon_investor
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Re: Vanguard MM 10-day hold on written checks

Post by anon_investor » Wed Aug 21, 2019 6:27 pm

sport wrote:
Wed Aug 21, 2019 5:11 pm
It seems to be a problem with the contractor's bank, not with Vanguard. If you have a local checking account, you could link that account to Vanguard and transfer the money to that account, and then write a local check. I would not want to pay in cash.
+1 to this.

Trader Joe
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Re: Vanguard MM 10-day hold on written checks

Post by Trader Joe » Wed Aug 21, 2019 6:28 pm

vectorizer wrote:
Wed Aug 21, 2019 5:07 pm
My SO and I have held a joint Prime Money Market account at Vanguard for many years as our central cash conduit to banks, emergency savings, and to write checks for extraordinary expenses. Substantially all our investments are held at Vanguard too FWIW.

We've been paying multiple contractors for work on our house the last couple of years with checks written against the MM. Our current cement contractor is complaining that the checks we give him are subject to a 10-day hold by his bank; the MM checks I give him are in the low thousands each. No other contractor has had this complaint. He's asked (but not demanded) that I give him cash for the final draw for his completed work. I really don't like to pay with cash but he's been reliable and reasonable, and I have no way to verify or refute his bank's hold policy, so I'm inclined to give him cash this one time.

Has anyone else heard of a 10-day hold imposed on Prime MM checks presented to banks?
No, I have never experienced this issue.

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JamesSFO
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Re: Vanguard MM 10-day hold on written checks

Post by JamesSFO » Wed Aug 21, 2019 6:31 pm

vectorizer wrote:
Wed Aug 21, 2019 5:07 pm
Has anyone else heard of a 10-day hold imposed on Prime MM checks presented to banks?
This is purely going to be the receiving bank's decision and likely a blend of issues around: federal reserve routing # (e.g. out of area), dollar amount of the check, the contractor's account status (e.g. new account, has overdraft vs. not, etc.).

delamer
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Re: Vanguard MM 10-day hold on written checks

Post by delamer » Wed Aug 21, 2019 6:33 pm

I agree with the advice to write a bank check.

If you do use cash, write up a receipt and insist that the contractor sign it.

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whodidntante
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Re: Vanguard MM 10-day hold on written checks

Post by whodidntante » Wed Aug 21, 2019 6:37 pm

Part of taking checks is that there can be long holds on checks. You can suggest he take a draw on a credit line and use the check to pay off the loan. Banks are usually willing to immediately apply the payment because it's trivial to reverse the effects of a bad check in that case.

I am generally suspicious of people who wish to use cash for large transactions. You might be contributing to tax fraud or fraud against you. I would not pay cash and the transaction shall leave an audit trail showing that I paid them. I would be willing to do a wire transfer but it's free at my bank. Zelle limits can be high but are bank dependent. What about a cashiers check or a bill pay ACH transfer or bill pay check?

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8foot7
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Re: Vanguard MM 10-day hold on written checks

Post by 8foot7 » Wed Aug 21, 2019 6:41 pm

there is precious little difference to you between check and cash in terms of consumer protection and ability to unwind. If contractor wants cash, and is willing to provide a lien release and receipt at the time you hand it over, then the only question is whether or not you want to incur the hassle of withdrawing thousands in cash. I’d ask for a discount for my trouble in getting and securing the cash, or give him the option of the full balance as a check.

It’s not your fault your checks are held and his bank ought to get a clue once a couple have been honored.

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Watty
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Re: Vanguard MM 10-day hold on written checks

Post by Watty » Wed Aug 21, 2019 6:50 pm

You might need to transfer the money ahead of time but you could also get a cashier's check from your local bank if you have one.

GrowthSeeker
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Re: Vanguard MM 10-day hold on written checks

Post by GrowthSeeker » Wed Aug 21, 2019 7:13 pm

Large denomination checks might be put on hold (e.g. over $10,000 I would guess, but maybe smaller amounts) by the bank to which the check gets deposited as well.

Or (if this is a final payment before completing the final bit of work) the contractor could simply be planning to accept the final payment in cash and then never show up again and not finish the work.

Maybe a cashier's check from a local bank?
Just because you're paranoid doesn't mean they're NOT out to get you.

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Re: Vanguard MM 10-day hold on written checks

Post by LilyFleur » Wed Aug 21, 2019 7:51 pm

GrowthSeeker wrote:
Wed Aug 21, 2019 7:13 pm
Large denomination checks might be put on hold (e.g. over $10,000 I would guess, but maybe smaller amounts) by the bank to which the check gets deposited as well.

Or (if this is a final payment before completing the final bit of work) the contractor could simply be planning to accept the final payment in cash and then never show up again and not finish the work.

Maybe a cashier's check from a local bank?
Have you spoken to his bank directly, or are you taking his word for it? Will he accept a credit card payment? (A credit card payment gives you more recourse as a consumer.) I recently paid for an entire HVAC system with a credit card.

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vectorizer
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Re: Vanguard MM 10-day hold on written checks

Post by vectorizer » Thu Aug 22, 2019 9:20 am

LilyFleur wrote:
Wed Aug 21, 2019 7:51 pm
Have you spoken to his bank directly, or are you taking his word for it? Will he accept a credit card payment? (A credit card payment gives you more recourse as a consumer.) I recently paid for an entire HVAC system with a credit card.
I don't think it's my place to contact his bank, so yes I'm taking his word for it, though the question is whether that should be my problem. The MM check I gave him Aug. 17 hit my MM account on Aug. 19, so his bank is ridiculous with its hold. I'm going to print out the check back image for the contractor so he can fight with his bank.

He doesn't accept credit cards. Only two out of many contractors I've hired has taken credit cards, and they were both large businesses with dozens of trucks. Most contractors here are small operators, and from what I've heard credit card acceptance is painful for small businesses so I don't blame the small guys for not taking credit cards.

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vectorizer
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Re: Vanguard MM 10-day hold on written checks

Post by vectorizer » Thu Aug 22, 2019 9:41 am

OP here. Thanks for the info and suggestions.

No one wrote that they've noticed Vanguard MM checks taking extra long to clear or long holds placed on them, which is mostly what I was asking.

Thanks for reinforcing my feeling that the contractor's bank's hold policy should not justify me paying with cash. I'll offer a certified check from my everyday local credit union, though even that's a bit of a hassle.

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goingup
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Re: Vanguard MM 10-day hold on written checks

Post by goingup » Thu Aug 22, 2019 10:01 am

I've only used MM checks a couple times, and the last time was 13 years ago. Vanguard ended the ability write checks on MM accounts unless the client specifically wanted to retain that ability and opted in to do so. I shredded our unused checks. Having a forgotten check book floating around the house, for an account that typically has a six-figure balance, was a security liability. Glad to be done with that!

vectorizer, why not ACH the money to your primary checking account? Then write the contractor a local check which his bank should honor immediately. I guess I don't understand why the choice is either a Vanguard check or cash. Why not a credit union check?

(In answer to your question, though, a 10-day hold doesn't surprise me.)

CurlyDave
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Re: Vanguard MM 10-day hold on written checks

Post by CurlyDave » Thu Aug 22, 2019 10:06 am

I have rentals and use a number of contractors in various trades.

They always prefer cash, and I always pay that way. I get better pricing than most people because of this.

As long as I keep a record of the transaction, the IRS has never given me a problem on this.

The big deal is the release of all liens, which he should sign before you pay him. And, in most states your canceled check is not a substitute for this release. You should be able to look up a state specific lien release form on the internet and print it off. Years ago that saved my bacon with one specific contractor, who wanted to jack up his price retroactively. I never hired him again.
Last edited by CurlyDave on Thu Aug 22, 2019 10:10 am, edited 1 time in total.

socaldude
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Re: Vanguard MM 10-day hold on written checks

Post by socaldude » Thu Aug 22, 2019 10:09 am

I agree, transfer the money ahead of time. Or,I will write Van MM checks to my bank/ck. acct. and then write a check to contractor's et.al. The elec. trans. can be very very slow ( weekends, holidays etc.) and a MM paper check to your bank can be much quicker. Been there, done that.

drzzzzz
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Re: Vanguard MM 10-day hold on written checks

Post by drzzzzz » Thu Aug 22, 2019 12:07 pm

An earlier poster mentioned this already and this could be the issue. On the new brokerage platform you can't write checks on a money market account only on the settlement account - I used an old check and Vanguard as a "courtesy" cleared it, but explained that I needed to rip up the money market checks and sent me new checks for the settlement account. Of course if you are still on the older mutual fund platform that might not be the issue.

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Re: Vanguard MM 10-day hold on written checks

Post by KingRiggs » Thu Aug 22, 2019 1:41 pm

drzzzzz wrote:
Thu Aug 22, 2019 12:07 pm
An earlier poster mentioned this already and this could be the issue. On the new brokerage platform you can't write checks on a money market account only on the settlement account - I used an old check and Vanguard as a "courtesy" cleared it, but explained that I needed to rip up the money market checks and sent me new checks for the settlement account. Of course if you are still on the older mutual fund platform that might not be the issue.
This is incorrect. You can still get check-writing privileges for some of the Vanguard money market funds. I write checks from my Municipal Money Market Fund all the time, even after converting to a brokerage account.
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Re: Vanguard MM 10-day hold on written checks

Post by Artsdoctor » Thu Aug 22, 2019 1:51 pm

vectorizer wrote:
Thu Aug 22, 2019 9:20 am
LilyFleur wrote:
Wed Aug 21, 2019 7:51 pm
Have you spoken to his bank directly, or are you taking his word for it? Will he accept a credit card payment? (A credit card payment gives you more recourse as a consumer.) I recently paid for an entire HVAC system with a credit card.
I don't think it's my place to contact his bank, so yes I'm taking his word for it, though the question is whether that should be my problem. The MM check I gave him Aug. 17 hit my MM account on Aug. 19, so his bank is ridiculous with its hold. I'm going to print out the check back image for the contractor so he can fight with his bank.

He doesn't accept credit cards. Only two out of many contractors I've hired has taken credit cards, and they were both large businesses with dozens of trucks. Most contractors here are small operators, and from what I've heard credit card acceptance is painful for small businesses so I don't blame the small guys for not taking credit cards.
I agree that it's a policy of the contractor's bank and there's nothing to do on your end. I suspect that the bank is placing a routine hold on the check because it's out of state. It's been a while since I've seen this happen but it used to happen quite a bit.

I would print out your check and show him that his bank collected the funds two days after depositing the check so it's clearly on him. If he doesn't like it, then he should take it up with his bank.

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Re: Vanguard MM 10-day hold on written checks

Post by HomeStretch » Thu Aug 22, 2019 1:59 pm

KingRiggs wrote:
Thu Aug 22, 2019 1:41 pm
drzzzzz wrote:
Thu Aug 22, 2019 12:07 pm
An earlier poster mentioned this already and this could be the issue. On the new brokerage platform you can't write checks on a money market account only on the settlement account - I used an old check and Vanguard as a "courtesy" cleared it, but explained that I needed to rip up the money market checks and sent me new checks for the settlement account. Of course if you are still on the older mutual fund platform that might not be the issue.
This is incorrect. You can still get check-writing privileges for some of the Vanguard money market funds. I write checks from my Municipal Money Market Fund all the time, even after converting to a brokerage account.
+1.

With a brokerage account, you can request (by completing a form) check-writing privileges on the settlement account (VMFXX) and a second MMF you designate on the form.

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Re: Vanguard MM 10-day hold on written checks

Post by drzzzzz » Fri Aug 23, 2019 6:51 pm

KingRiggs wrote:
Thu Aug 22, 2019 1:41 pm
drzzzzz wrote:
Thu Aug 22, 2019 12:07 pm
An earlier poster mentioned this already and this could be the issue. On the new brokerage platform you can't write checks on a money market account only on the settlement account - I used an old check and Vanguard as a "courtesy" cleared it, but explained that I needed to rip up the money market checks and sent me new checks for the settlement account. Of course if you are still on the older mutual fund platform that might not be the issue.
This is incorrect. You can still get check-writing privileges for some of the Vanguard money market funds. I write checks from my Municipal Money Market Fund all the time, even after converting to a brokerage account.
That's interesting, is your brokerage account a margin account since when I look into this the following alert is present regarding having an alternate redemption fund such as a money market "You can't designate an alternative redemption fund on a margin account NA Ineligible"
thanks

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Re: Vanguard MM 10-day hold on written checks

Post by Broken Man 1999 » Fri Aug 23, 2019 7:08 pm

I haven't written all that many checks on my Vanguard Federal MM account on the brokerage platform, but the ones I have written were very large, mostly to the company doing our remodel. Never an issue. Also paid other large bills, also not a problem.

OP, the issue is with your contractor's bank, totally.

One can also have a overdraft set up for your check-writing using other funds. I like that because I try to keep my MM very lean.

Broken Man 1999
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Re: Vanguard MM 10-day hold on written checks

Post by Artsdoctor » Sat Aug 24, 2019 9:00 am

When you really think about it, no reasonable business is going to have such dire cash flow restrictions. If the cement guy can't afford to float a check on a 10-day hold, there are some serious business problems. If he simply doesn't like the idea of a 10-day hold, then there are some serious psychological problems. Maybe he has had a run of bounced checks or customers who haven't paid; however, that's the cost of doing business and one learns to deal with it. Either way, the guy has issues.

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Re: Vanguard MM 10-day hold on written checks

Post by welderwannabe » Sat Aug 24, 2019 9:19 am

I believe the vanguard checks are really bank drafts and not checks. Similar to the 'checks' carmax gives you when you sell a car to them...they are only good upon verification of clean title.

Many banks will hold them for extended periods of time.
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Re: Vanguard MM 10-day hold on written checks

Post by mickeyd » Sat Aug 24, 2019 1:43 pm

Our current cement contractor is complaining that the checks we give him are subject to a 10-day hold by his bank; the MM checks I give him are in the low thousands each.
I'll bet that the contractor has had "banking problems" with his bank in the past and OP is just getting the result of this. Suggest to the contractor that HE open up an account at another (more friendly) bank and you will at that time give him a MMF check to deposit there. I'll bet he accepts your MMF check after that.
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