skip to main content

NLNB Blog

Why Do Bank Holidays Exist?

It’s a question that many people have wondered about at one time or another. Why are the banks randomly closed on certain days of the year when other retail and foodservice businesses are open as usual? Well, even your local tellers need a break from the constant stream of transactions, but that’s not the reason why bank holidays exist. To get to the bottom of why the banks have certain days off during the calendar year, we’re going to tackle this topic in today’s blog post.

NebraskaLand National Bank Observes Bank Holidays
Like any other national or community bank in the United States, our North Platte and Kearney banks are, of course, obligated to observe federal banking holidays. However, with online banking, 24-hour ATMS and mobile deposit services, we like to think that we’re always there for you, even when our doors are locked on those few days a year. If you’re curious about our hours or contact information here at NebraskaLand, visit here.

The Federal Reserve
In short, banks are closed on federal holidays because the Federal Reserve, a major government agency, is closed. Congress began to designate federal holidays in 1870 with the intention of granting federal employees paid time off. There are currently 10 federal holidays which continue to legally grant time off to all U.S. government employees, including those who work at the Federal Reserve.

Though most banks belong to the private sector and are therefore not required to close on federal holidays, most tend to close anyway because the bulk of their activities and financial transactions rely on the Federal Reserve.

Automated Clearing House (ACH)
Most banks are becoming increasingly responsible for processing electronic payments for things like direct deposits for payroll, online bill payments, insurance payments, peer-to-peer transactions, and more. These types of transactions all use the Automated Clearing House (ACH), an electronic network that transfers funds from one bank account to another at any bank in the country. At predetermined times, this information is sent to the Federal Reserve to be processed, sorted, and cleared. Last year, a massive 24 billion transactions were made using ACH!

When the Fed is closed, however, these transactions bottleneck in the middle of their journey from one bank to another. This delays the amount of time that it takes for a check to clear, for payroll to get deposited in an employee’s account, for a Venmo transaction to show up as usable funds, and so forth. Indeed, ACH transactions can take up to four business days to clear on a normal basis. It is also worth mentioning that wire transfers do not rely on the ACH network, and so they are routed through the Federal Reserve and cannot be made on bank holidays.

Some Bank Branches Don’t Close On All Federal Holidays
Certain major banks like Chase and Wells Fargo actually stay open on Columbus Day. While some transactions such as account withdrawals or loan applications can be made, transactions that rely on the Federal Reserve still cannot be executed and are delayed until the next business day.

Conversely, some banks are also closed on holidays that are not considered federal holidays due to the fact that they follow the New York Stock Exchange schedule, which adds a few more days into the mix of things. Some banks close on Good Friday, and others will limit the number of services available on NYSE holidays. State holidays may also contribute to bank closures.

Go With The Community Banking Experts At NebraskaLand Today!
Unless it’s a bank holiday or it’s after our standard business hours, NebraskaLand National Bank is here for you! Learn more about our Community Minded Checking Accounts as part of our personal banking services here, or contact us with any questions about business banking. 

Theme picker

Local People. Local Decisions. Local Ownership.
NebraskaLand National Bank is committed to website compliance with the Americans with Disabilities Act.
We strive to make our site useful and accessible to everyone. If you have questions or comments regarding the website please contact us.
copyright © 2004-2020 NebraskaLand National Bank. All rights reserved. / sitemap / Admin Login
top
^