What are Bankable Funds?

Bankable funds are payment methods that are taken or accepted at financial institutions. Retailers, as well as other organizations that accept payments directly from customers, usually request that all payments be made in forms that the bank can accept and redeem. For instance, cash and cashier's checks are bankable fund types. They are accepted easily and deposited at every major bank. However, other types of assets like stocks and precious metals (even though they may be of significant value), usually won't be accepted as a payment type.

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How are Bankable Funds Used?

Bankable funds do not include many otherwise valuable assets. This is solely because these assets, despite being of value, aren't cash or can't be converted to cash easily. There are times when a merchant may need to undergo considerable stress and expense in an attempt to convert these payment forms to currency; also, an asset's value such as stock or precious metal may drop precisely when a merchant accepts it as payment, as well as, when he or she tries attempts a conversion into currency. However, currency isn't as volatile. It is possible for merchants to collect personal checks as bankable funds in that their method of conversion to cash is easy, particularly when check conversion technology is utilized. But, it may require some days to successfully convert a personal check into bankable funds, this is why some merchants won't collect them. Certain merchants may reject personal checks with the mindset that the checks may be fraudulent. Also, while a majority of the banks would accept personal checks for deposit, they might not release the funds right away. Most of these banks would hold funds deposited through personal check up until the check clears, typically the next business day. Cashier's checks and money orders are termed as bankable funds, simply because its conversion process to cash is fairly easy. However, most banks would place a hold on any money order until it clears just as with personal checks. The best method of converting a money order into cash would be to cash it at an issuing institution, like Western Union. The cash funds can then be banked immediately. A bank may decide to place a hold on a cashier's check up until it clears, particularly if the check is for a sum surpassing $5,000. However, it is mandatory that the bank makes the first $5,000 available right away. But because money from a cashier's check is banked immediately once it has been deposited, it's possible to withdraw money from a fake cashier's check before the bank becomes aware it is fraudulent.