Legal Definitions - DFA

Definition: DFA stands for Delayed Funds Availability. It refers to the practice of banks holding a portion of deposited funds for a certain period of time before making them available for withdrawal or use.

Example: Let's say you deposit a check for $1,000 into your bank account. If your bank has a DFA policy, they may hold $200 of that amount for a few days before making it available for you to use. This means that you would only have access to $800 of your deposited funds until the hold is released.

Explanation: The example illustrates how DFA works in practice. Banks use this policy to protect themselves from potential fraud or insufficient funds in the deposited check. By holding a portion of the funds, they can ensure that the check clears before releasing the full amount to the account holder. This can be frustrating for customers who need immediate access to their funds, but it is a common practice in the banking industry.